Korea-Australia Free Trade Agreement

Quick Guide: Key Investment & Investor-State Dispute Settlement (ISDS) Outcomes

Quick Guide: Key Investment and Investor-State Dispute Settlement (ISDS) Outcomes [PDF 47 KB]

The Korea-Australia Free Trade Agreement (KAFTA) provides improved access and protection for Australian investors and investments in Korea.  It also promotes increased Korean investment in Australia.

KAFTA ISDS is a modern, balanced mechanism with explicit safeguards for legitimate public welfare regulation

  • Investment obligations can be enforced directly by Australian investors (and by Korean investors) through an ISDS mechanism. An ISDS claim can only be made on the basis of a breach of an investment obligation or commitment. It cannot be based on a breach of an obligation in other parts of KAFTA such as the intellectual property or environment chapters.
  • The KAFTA Investment Chapter and ISDS provisions include explicit safeguards to protect legitimate public welfare regulation, including in areas such as public health, and the environment. These include: safeguards built into the Investment Chapter obligations; ‘reservations’ which allow Australia to reserve policy space in sensitive areas; general exceptions; and procedural safeguards built into the ISDS mechanism.
  • ISDS does not apply to decisions made concerning investments which are subject to review under Australia’s foreign investment policy.

KAFTA promotes increased Korean investment in Australia

  • KAFTA raises the screening threshold at which Korean investments in non-sensitive sectors are considered by Australia’s Foreign Investment Review Board from $252 million to $1,094 million.
  • Australia retains the ability to screen investments in sensitive sectors, including media, telecommunications, defence, and agriculture at lower levels.

KAFTA improves opportunities and protections for Australian investors

  • Under KAFTA, Korea opens further its economy to Australian investors through the progressive reduction of market access barriers in key sectors including: telecommunications; legal services; and accounting and tax agency services.
  • KAFTA provides enhanced protections and certainty for Australian investors in Korea (and for Korean investors in Australia) with measures to ensure non discrimination, and protection and security for investments.

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