Republic of Korea country brief
Introduction
Australia and the Republic of Korea (ROK, also known as South Korea) are strong economic, political and strategic partners with common values and interests. Direct personal links between the two countries are increasing and make a significant contribution to the relationship. Economic relations are complementary and growing, with the ROK a key market for Australian minerals, energy and travel services. Australia is a major market for ROK petroleum, passenger vehicles, electronic goods and household appliances. The investment relationship is also growing and diversifying.
Australia and the ROK have common strategic interests, particularly in seeking a peaceful resolution to tensions on the Korean peninsula. Both countries have important alliances with the United States and both have made significant and practical contributions to efforts to secure regional security and stability, such as sending troops to Afghanistan, Iraq and East Timor.
Bilateral relations have strengthened considerably over the last two years under new governments in both countries, aided by the strong personal bonds that have grown between leaders and ministers. A similar approach to international issues, particularly the G20, has reinforced the partnership.
Political overview
Government and Administration
Since its establishment in 1948, the Republic of Korea has maintained a presidential system (except briefly when a parliamentary system was in place between June 1960 and May 1961). Under the presidential system, government power is shared by three branches: the executive (headed by a president), the legislature (a single-house National Assembly) and the judiciary.
The President
The president holds supreme power over all executive functions of government, within the constraints of the Constitution. The president appoints public officials, including the prime minister (with the approval of the National Assembly), ministers (who need not be members of the National Assembly) and the heads of other executive agencies. The president is also commander-in-chief of the armed forces. The president is limited to serving a single five-year term. Mr Lee Myung-bak was elected president on 19 December 2007 and inaugurated on 25 February 2008. The next presidential election is scheduled for December 2012.
The National Assembly
Legislative power is vested in the unicameral National Assembly, comprising 299 members elected for a four-year term. This includes 245 members elected by popular vote, with the remaining 54 seats distributed proportionately among political parties according to a second, preferential ballot. A regular legislative session, limited to 100 days, is convened once a year. Extraordinary sessions, limited to 30 days, may be convened at the request of the president or at least 25 per cent of the Assembly members. Several extraordinary sessions are usually held each year. The next general election for the National Assembly is scheduled for April 2012. (Refer also to Recent history and political developments, below.)
The Judiciary
Judicial power is vested in the courts (constitutionally an independent branch of government). The court system functions on three levels: the district courts, the appellate courts and the Supreme Court, which is the final court of appeal. The Chief Justice is appointed by the President, with the consent of the National Assembly, to a single six-year term. The President appoints Supreme Court judges on the recommendation of the Chief Justice, and lower-court judges are appointed by the Chief Justice with the consent of the Conference of Supreme Court Justices. A separate Constitutional Court renders judgments regarding the constitutionality of laws, impeachment cases, jurisdictional disputes between state agencies and the dissolution of political parties. There is also a Family Court.
Local Government
The ROK is administratively divided into seven metropolitan cities and nine provinces. Metropolitan cities are further divided into districts or wards, while provinces are divided into cities, counties and towns. Until 1995, senior local and provincial government officials were appointed by the president. From that time, elections for city mayors, provincial governors, and other local representatives have been held every four years, most recently in May 2006. The next local government elections are scheduled for June 2010.
More detailed information on the ROK's system of Government can be found at the official ROK Government website.
Recent history and political developments
From 1910 to 1945, Korea was subject to colonial rule by Japan. Following World War II, Korea was under US military control for three years until 1948, when the first Republic of Korea government was established after a UN-supervised election. In the post-Korean War period (after 1953), following the Presidency of Syngman Rhee, there was a series of Korean military dictatorships, with the first democratic election of a president occurring in 1987.
While the ROK is today one of the most vibrant democracies in Asia, political parties have weak institutional roots. In general, political parties divide according to the personality of their leaders and regional affiliations rather than along ideological lines, although this is changing gradually, reflecting a new generation of National Assembly members and voters.
President Lee Myung-bak, of the conservative Grand National Party (GNP), won the presidential election on 19 December 2007. A former top executive of the Hyundai Group and former mayor of Seoul, Lee attracted 48.7 per cent of the vote, ahead of Chung Dong-young from the United New Democratic Party (UNDP) at 26.1 per cent and former GNP colleague Lee Hoi-chang, who ran as an independent and gained 15.1 per cent. President Lee had stood on an economic reform platform, including further deregulation of the economy and a tougher approach to unions.
In National Assembly elections on 9 April 2008, the GNP won 131 of 245 districts and secured 22 of the 54 proportional seats, making a majority of 153 of 299 seats in the 18th National Assembly. The United Democratic Party (UDP, formerly UNDP) won 81 seats in total (66 districts and 15 proportional seats), down from 136 seats prior to the election. The UDP has since merged with the minor Democratic Party (DP) under the latter's name. The Liberty Forward Party and Pro-Park Alliance conservative parties won 18 seats and 14 seats respectively. According to the Korean National Election Commission, voter turnout was a record low at 46 per cent of 37.8 million eligible voters. In the months following the election, the GNP gained seats by attracting new members from the minor conservative parties and independents, bringing its majority to 170.
The GNP did not win any seats in by-elections for five National Assembly seats held on 29 April 2009. In by-elections for five seats held on 28 October 2009, the GNP held one fiercely-contested seat in South Gyeongsan Province and won another from an independent in Ganwon Province. The opposition DP held one seat and won two new seats. A current breakdown of seats in the ROK National Assembly follows.
| Political Party | As at 21 December 2009 | 9 April 2008 | 15 April 2004 | 13 April 2000 |
|---|---|---|---|---|
| Grand National Party (GNP) | 169 | 153 | 121 | 133 |
| Democratic Party (DP) * | 87 | - | - | - |
| UDP | - | 81 | 152 | - |
| Pro-Park Alliance (PPA) | 8 | 14 | - | - |
| Liberty Forward Party (LFP) | 17 | 18 | - | - |
| Create Korea Party | 2 | 3 | - | - |
| Democratic Labor Party (DLP) | 5 | 5 | 10 | 0 |
| Solidarity for New Progressive Party (NPP) | 1 | 0 | - | - |
| (Former) Democratic Party (DP - now part of the main opposition Democratic Party) | - | - | 9 | 115 |
| United Liberal Democrats (ULD) | - | - | 4 | 17 |
| Minor parties | - | - | 0 | 3 |
| Independents | 9 | 25 | 3 | 5 |
| Total | 298** | 299 | 299 | 273 |
- * Merger of the former Democratic Party and the United Democratic Party (UDP). The UDP was formerly UNDP and, prior to that, Uri Party.
- ** One of the 299 seats is currently vacant.
Since taking office in February 2008, and despite its convincing win in the April 2008 National Assembly elections, President Lee and his Grand National Party have faced some serious political and economic challenges, not least of which has been the global financial crisis – to which the ROK Government responded decisively (refer to the Economic Overview). In mid-2008, the Lee Administration faced huge street protests, principally over its decision to allow recommencement of US beef imports, which culminated in an opposition boycott and then physical occupation of the National Assembly. Again in July 2009, there were physical altercations in the National Assembly as the Government passed new media laws. The Lee Administration has passed some reforms, including tax cuts, voting rights for overseas Koreans, allowing the ROK's chaebols to enter the banking sector, and loosening media cross-ownership limitations. On 3 September 2009, President Lee announced his third Cabinet reshuffle in 14 months, replacing seven ministers, including the Prime Minister and the Ministers for Defence and the Knowledge Economy (a key economic portfolio).
Foreign Relations
Since the Korean War, the ROK has been preoccupied with the military threat from North Korea (the Democratic Peoples' Republic of Korea or DPRK) and has relied on the United States to guarantee its security. At present, the United States maintains around 28,000 troops in the ROK.
By virtue of geography and economic influence, relations with the major powers – China, the United States, Japan and Russia – remain the most important foreign policy priorities for the ROK, after its relationship with North Korea. In December 2008, a Japan-China-ROK Trilateral Summit, the first to be held independently of multilateral meetings, met in Japan. At this summit, the three heads of government signed a Joint Statement on International Finance and Economy and a Joint Statement for Tripartite Partnership, released an Action Plan for Promoting Trilateral Cooperation and a Joint Announcement on Disaster Management Cooperation, and agreed to hold such summits annually. The second Japan-China-ROK Trilateral Summit was held in October 2009, marking 10 years of trilateral cooperation.
Over time, notwithstanding the importance of the great powers in its region, the ROK has actively sought to diversify its diplomatic and trade links and has made considerable efforts to ensure itself a place in the international community commensurate with its economic status. It joined the UN in September 1991 and the Organisation for Economic Co-operation and Development (OECD) in 1996. It is an active member of the World Trade Organization (WTO), regional fisheries organisations, UN agencies and regional organisations such as Asia-Pacific Economic Cooperation (APEC), the ASEAN Regional Forum (ARF), the Forum for East Asia – Latin America Cooperation (FEALAC) and the East Asia Summit (EAS). It also takes part in the Asia–Europe Meeting (ASEM) and the G20, and is a dialogue partner of the Pacific Islands Forum. The ROK will host a G20 Summit in November 2010.
Under the current Lee administration, the ROK sees itself as a “middle power” that is well-positioned to play a pivotal role on global and regional issues, such as disarmament. It appreciates the benefits of working together with Australia, which it sees as sharing similar values and interests.
Foreign policy under the Kim Dae-jung administration (1998–2003) emphasised a 'sunshine policy' of engagement with the DPRK. President Kim's overriding objective was to secure regional peace and stability, and build a firm foundation for reconciliation with the North and the eventual reunification of the peninsula. The Roh Moo-hyun administration (2003–2008) sought to encourage regional partners to urge North Korea to seek a peaceful, diplomatic route to engagement with the international community and to abandon its nuclear weapons programs.
President Lee Myung-bak has taken a tougher line on North Korea, linking economic aid to the need for North Korea to end its nuclear arms program. Since August 2003, the ROK has participated in the Six-Party Talks with North Korea, the United States, China, Japan and Russia. The Talks aim to find a lasting solution to the North Korea nuclear issue. See North Korea (DPRK) country brief.
Economic overview
At a glance
Economy
The ROK has made remarkable economic progress in the last half-century. When the Japanese occupation ended in 1945, Korea was impoverished and its economy was rurally-based. Much of its infrastructure was destroyed during the Korean War, which also had an enormous human cost. As a result, by 1960 the ROK's per capita GDP lagged behind those of Zambia and Bangladesh. Sustained high economic growth since the 1960s has led to the ROK's transformation into a highly industrialised and internationally competitive economy. The ROK is now ranked among the 15 largest economies in the world.
The ROK was hard hit by the global financial crisis, particularly in the December quarter of 2008, when real GDP contracted 5.1 per cent (quarter-on-quarter), its weakest quarterly performance since the Asian financial crisis. Exports of goods and services (equivalent to 55 per cent of GDP) fell by 9.9 per cent in the fourth quarter. Over the year to December 2008, the economy grew by 2.2 per cent (down from 5.1 per cent in 2007).
Before the worst effects of the global financial crisis had hit, the government of the ROK had already planned to spend around $US10 billion over a year as part of a comprehensive package (of tax rebates and fuel subsidies for low-income earners) to offset, in part, the effects of oil and food-price inflation. In direct response to the crisis, the ROK government has announced three fiscal stimulus packages — in November 2008 (new spending and investment tax credits), January 2009 (investment over the next four years in environment-friendly projects to bolster employment) and July 2009 (a fund to promote corporate investment and improve research and development incentives) — worth a total of A$90 billion. The Bank of Korea reduced interest rates by 325 base points between October 2008 and February 2009 to two per cent.
The ROK narrowly avoided a technical recession by posting 0.1 per cent growth (quarter-on-quarter) for the first quarter of 2009, driven by a turnaround in domestic demand. Second quarter GDP growth exceeded expectations by reaching 2.6 per cent (quarter-on-quarter). Among the factors supporting recovery were the rapid devaluation of the Korean won, providing exporters with a significant buffer, and the front-loading of the ROK government's fiscal stimulus package. In the third quarter, the economy posted 3.2 per cent growth (quarter-on-quarter), the highest in seven years, driven by robust manufacturing and capital spending. Compared to a year earlier, GDP grew 0.9 per cent in the third quarter, reversing three straight quarters of year-on-year contraction.
ROK exports, central to economic growth, have declined in 2009, although the rate of decline has slowed during the year from -25.2 per cent in the first quarter of 2009 to -17.0 per cent in the third quarter. Total exports from January to October 2009 were valued at US$294.7 billion, a 19.5 per cent decrease from 2008.
Financial and stock markets have stabilised. The benchmark KOSPI stock index dipped as low as 1,081 in early March 2009, but by the end of August it had returned to over 1600 and it remained stable through to December.
The ROK Won too gained ground throughout 2009, reaching year-highs in December. While the Won gained value in these months against the USD, Yuan and Yen, it lost value relative to the AUD, in particular from late May onwards. These changes follow a significant depreciation in the Won earlier in 2009.
International and local analysts have revised upwards their forecasts for the ROK economy. The IMF predicts that the ROK economy will contract by 1.0 per cent in 2009 and grow 3.6 per cent in 2010. The World Bank is forecasting a contraction in GDP of -0.7 per cent in 2009 and growth of 3.7 per cent in 2010. Sustained growth hinges on recovery in the world economy and, particularly, demand for ROK exports in its largest export markets: China, the United States and Japan.
Economic Partners
The ROK's traditional trade and financial links with the United States are supported by strengthening ties within Asia. In 2008, China became the ROK's largest trading partner and the destination for 21.7 per cent of its exports. The United States, as the ROK's main supplier of key products such as computer chips and as the main market for many Chinese goods manufactured from ROK inputs, is likely to remain vital to the ROK's economic prospects for the foreseeable future.
The ROK has concluded free trade agreements (FTAs) with Chile, Singapore, the European Free Trade Association (EFTA - Iceland, Norway, Liechtenstein and Switzerland), the United States (not yet ratified), ASEAN and the European Union (not yet ratified), and an FTA-style agreement with India.
The ROK is currently negotiating FTAs or similar agreements with Canada, Mexico, Japan, the Gulf Cooperation Council, Peru, Australia (see Australia-Korea Free Trade Agreement Negotiations section below), New Zealand and Columbia. The ROK has also been considering FTAs with China, Russia, Turkey, MERCOSUR (a South American regional trade agreement), the Southern African Customs Union (SACU – Botswana, Lesotho, Namibia, South Africa and Swaziland) and Israel.
The ROK is active in a number of international trade and economic fora, including the World Trade Organization, APEC and OECD. It holds regular consultations with Europe within the Asia-Europe Meeting (ASEM).
Bilateral relationship
History
The first contact between Australia and Korea took place in 1884, when Australian missionaries landed at Busan. Australian photographer George Rose travelled the length of the peninsula in 1904 and photographed the country and its people. His images of everyday Korean life, clothing and customs form a valuable part of Korea's documentary history.
The relationship was strengthened by Australia's participation in the United Nations (UN) Commissions on Korea (beginning in 1947) and in the Korean War (1950–53). More than 18,000 Australian troops served under UN command and 339 Australians died during the Korean War.
Full diplomatic relations were established between Australia and the ROK in 1961. In February 1962, the ROK Consulate-General in Sydney (opened in 1953) was elevated to embassy status, and, in June 1962, the Australian Embassy in Seoul was opened. Since then, Australia and the ROK have become important economic, political and strategic partners. People-to-people links are strong and increasing, and our bilateral economic relationship is complementary, longstanding and robust. To mark the 50th anniversary of diplomatic relations, the Governments of Australia and the ROK have agreed to designate 2011 as a “Year of Friendship”.
Government Contacts
Australia-ROK high-level contact is substantial and expanding with regular meetings between leaders and senior ministers.
Most recently, Australia's Minister for Foreign Affairs Stephen Smith visited the ROK from 15-16 December 2009. He held a Foreign Ministers' Meeting with ROK Minister for Foreign Affairs and Trade Yu Myung-hwan, and also met with Prime Minister Chung Un-chan, Minister for National Defence Kim Tae-young, and Minister for Unification Hyung In-taek. During their meeting Foreign Ministers reviewed progress under the Action Plan for Australia-ROK Enhanced Global and Security Cooperation (refer to Security, below) and looked at ways to further strengthen this cooperation in the future. Mr Smith and Mr Yu also agreed on a new revised Action Plan, which will be considered by leaders early in 2010 and signed a signed a Memorandum of Understanding on Development Cooperation (refer to Development Cooperation, below).
Earlier in December 2009, former ROK Prime Minister Dr Han Seung-soo visited Australia as President Lee's representative at a regional 1.5 track conference on the development of an Asia Pacific community held in Sydney on 3–5 December 2009.
Minister for Trade Simon Crean visited the ROK from 27–28 October 2009. He met ROK Minister for Trade Kim Jong-hoon, Minister for Strategy and Finance Yoon Jeung-hyun, and Minister for Food, Agriculture, Forestry and Fisheries Chang Tae-pyoung. Mr Crean also met the Chairman and CEO of POSCO, Mr Chung Joon-yang, the Chairman and CEO of GS Caltex, Dr Hur Dong-soo and Seoul-based representatives from Macquarie Group Korea, Rio Tinto, KPMG, ANZ Korea, Meat and Livestock Australia and ROKIaccess. During his meetings, Mr Crean discussed ways to ensure the WTO Doha Round is brought to a successful conclusion, and developments in regional architecture. He also explored new areas of trade and investment and sought to advance negotiations on a bilateral free trade agreement (refer to Australia-Korea Free Trade Agreement Negotiations, below).
The Parliamentary Secretary for the Prime Minister and Parliamentary Secretary for Trade, the Hon Anthony Byrne MP, represented Australia at the funeral of former ROK President Kim Dae-jung in Seoul on 23 August 2009. He also conducted bilateral meetings on 24 August.
ROK Minister for Trade Kim visited Australia from 17–19 May 2009. Mr Kim and Australian Minister for Trade Crean held the fifth Australia-ROK Ministerial Joint Trade and Economic Commission meeting in Melbourne on 18 May 2009, which included the launching of the opening round of bilateral FTA negotiations (refer to Australia-Korea Free Trade Agreement Negotiations, below).
Minister for Resources and Energy Martin Ferguson visited the ROK from 4–8 April 2009 to discuss the potential for further expansion of trade in resources, including LNG.
ROK President Lee Myung-bak visited Australia from 4–6 March 2009, accompanied by Minister for Foreign Affairs and Trade Yu Myung-hwan, Minister for Trade Kim Jong-hoon and then-Minister for Knowledge Economy Lee Youn-ho. Prime Minister Kevin Rudd and President Lee released a Joint Statement on Enhanced Global and Security Cooperation (refer to Security below) and the two sides announced agreement to launch negotiations for a free trade agreement (FTA – see below). They also discussed shared regional and global challenges, including the global financial crisis.
ROK Minister for Foreign Affairs and Trade Yu visited Australia on 22–24 January 2009 for a bilateral Foreign Ministers' Meeting in Perth and consultations in Sydney.
These exchanges followed earlier visits in 2008, including:
- Prime Minister Rudd visiting the ROK in August 2008
- Minister for Climate Change and Water Penny Wong visiting the ROK in June 2008
- Minister for Broadband, Communications and the Digital Economy Stephen Conroy visiting the ROK in June 2008
- Minister for Foreign Affairs Smith visiting Seoul in May 2008
- Minister for Agriculture, Fisheries and Forestry Tony Burke visiting the ROK in April 2008
- Australian Speaker of the House of Representatives Harry Jenkins representing Australia at President Lee Myung-bak's inauguration in February 2008.
In other political-level exchanges, from 14–22 August 2009, Spokesperson of the ruling Grand National Party (GNP) and Member of the National Assembly of the ROK, Ms Cho Yoon-sun, visited Sydney, Canberra and Melbourne. Chairman of the GNP Park Hee-tae visited Australia from 22–24 May 2009.
Australian President of the Senate John Hogg visited the ROK from 17–20 December 2008. Chair of the Australia-Korea Parliamentary Group Julie Owens visited the ROK from 23–29 November, 2008.
Security
Australia and the ROK share key security interests in North Asia and the Asia-Pacific region, with peace and stability on the Korean peninsula critical to the economic performance and security of both countries. Both support a nuclear-free Korean peninsula and regard the continued commitment of the United States to the Asia-Pacific as critical to stability and prosperity in the region.
On 5 March 2009, Prime Minister Rudd and President Lee released a Joint Statement on Enhanced Global and Security Cooperation.
The Statement reflects Australia and the ROK's shared values and the importance both countries attach to addressing security issues in the region and the world. It paves the way for closer cooperation bilaterally and in regional and multilateral fora. Specific areas of cooperation include: law enforcement, border security, counter-terrorism, disarmament and non-proliferation, defence and disaster response. The Statement provides a framework for expanding practical defence cooperation in areas such as military information sharing, peacekeeping, civil-military cooperation, joint exercises and training, and defence industries.
On 16 December 2009, Minister for Foreign Affairs Smith and ROK Minister for Foreign Affairs and Trade Yu reviewed progress under the Action Plan that supports the leaders' Joint Statement on Enhanced Global and Security Cooperation and looked at ways to further strengthen cooperation. Since March 2009, the Action Plan has delivered important outcomes, including closer cooperation in law enforcement, non-proliferation and defence. Mr Smith and Mr Yu agreed on a new revised Action Plan, which will be considered by leaders early in 2010.Security issues are discussed regularly by the two countries, including at Foreign Ministers' consultations, Pol-Mil (political-military) meetings between senior foreign ministry and defence officials, Mil-Mil talks, annual Chief of General Staff Exercises and through exchanges with the Australian Defence Force (ADF) staff colleges and the ADF Peacekeeping Centre. The Royal Australian Navy makes ship visits to the ROK, conducts exercises with the Korean Navy and holds Navy-to-Navy talks. The Royal Australian Air Force makes visits to the ROK and holds Airman-to-Airman talks annually. Security issues are also addressed in multilateral fora such as the ASEAN Regional Forum.
The ROK and Australia share a strong commitment to regional and global initiatives against terrorism and to prevention of the proliferation of weapons of mass destruction. In October 2009, the ROK Government announced plans to establish a Provincial Reconstruction Team (PRT) in Afghanistan. It intends to send up to 350 soldiers and 40 police and 75 civilian aid and reconstruction workers, as part of the PRT. This follows an earlier deployment of ROK forces which were withdrawn in December 2007.
ROK troops also served in Iraq and, at its peak, the ROK troop deployment to Iraq was 3,500 — the third largest contribution after the US and the UK. ROK military personnel in Iraq were mostly engineers and medics, involved in reconstruction including road and bridge building, delivery of training to local police and officials, medical support and education projects. The ROK's deployment concluded in December 2008. In addition to a military contribution, the ROK allocated US$260 million in aid to Iraq during 2003–2008, and an additional $200 million for 2008–2011.
The ROK has also provided around 350 troops for service in the United Nations Interim Force (UNIFIL) in Lebanon. The ROK, like Australia, was among the 18 co-sponsors of the UN Security Council's December 2008 Resolution 1846 against piracy off the coast of Somalia. In 2009, the ROK National Assembly gave approval for a ROK Navy warship to be deployed for six months from March 2009, in order to take part in the international effort to combat piracy in the waters off the Gulf of Aden. This was the first overseas operational deployment for the ROK Navy. The ROK also announced joining the Proliferation Security Initiative (PSI) in May 2009.
Development Cooperation
On 16 December 2009, Minister for Foreign Affairs Smith and the ROK Minister for Foreign Affairs and Trade Yu signed a Memorandum of Understanding on Development Cooperation. The Memorandum reflects the depth of the Australia-ROK relationship and the will of our two countries to cooperate on international development assistance efforts. Examples of likely cooperation include engaging on development aspects of the G20 agenda, particularly while the Republic of Korea chairs the G20 during 2010, and strengthening cooperation in disaster and emergency preparedness, response and management. The Memorandum is an outcome of the commitment made by Prime Minister Rudd and President Lee to enhance Australia-Korea security cooperation, as expressed in the Joint Statement on Enhanced Global and Security Cooperation (refer to Security above).
Science and Technology
The ROK has made advancing its science and technology capacity a major policy. Australia's strength in basic scientific research and innovation offers strong synergies with the ROK's strength in commercial application. Close cooperation exists in areas such as environmental technology and biotechnology, and a scientific and technological cooperation treaty was concluded in 1999. Cooperation on information, communication technologies is growing with five 'Broadband Summits' having been held to date. Involving ministerial, business and academic participants, the Summits have generated greater understanding in each other's capacities leading to closer collaboration. The Summits have expanded to include New Zealand and the most recent was in November 2009 in Auckland.
People-to-People and Institutional Links
Direct personal contact between Australians and Koreans is an important component of the bilateral relationship. Exchanges for education, tourism, cultural and media purposes have increased over past decades, bolstered by strong support from the two governments, the Australian Korean community, ROK citizens in Australia and the growing Australian presence in the ROK.
Australia and the ROK signed a bilateral social security agreement on 6 December 2006 to give improved social security protection to people who have lived and/or worked in both Australia and the ROK. The social security agreement also exempts Australian employers from the need to provide ROK social security support for Australian employees sent temporarily to work in the ROK, provided the employee remains covered in Australia by compulsory superannuation arrangements. Further information: Bilateral social security agreement with the Republic of Korea.
The Australia-Korea Foundation (AKF), an Australian Government funded body established in May 1992, makes an important contribution to people-to-people links. Supported by a Secretariat within the Department of Foreign Affairs and Trade, the AKF funds projects and programs that broaden and deepen the relationship between Australia and the ROK, especially in the fields of commerce and industry, science and technology, education and the arts, sport and media.
Non-governmental links also include the Korea-Australia and Australia-Korea Business Councils. Their annual joint meeting allows members to network and exchange views about recent developments in the relationship, and to develop and consolidate bilateral private sector links.
People-to-people links have also been fostered through sister-city relationships, such as those between Townsville and Suwon, and Adelaide and Daejeon. Sister-state relationships are enjoyed by Queensland and Gyeonggi Province, New South Wales and Seoul, South Australia and Chungcheong Province, and Victoria and Busan.
Bilateral economic and trade relationship
Australia's trade relationship with the ROK developed rapidly during the 1960s as the ROK pursued industrialisation policies requiring large amounts of raw materials. The ROK is now one of Australia's most important trading partners. The two countries share a vibrant and complementary trade relationship, with Australia providing raw materials, elaborately transformed manufactures, food and beverages, and technology and services to the ROK, and importing finished products such as cars, telecommunications equipment and computers.
The ROK is Australia's fifth-largest overall trading partner (total two-way trade of $28.1 billion in 2008–09). In 2008, the ROK surpassed the United States to become Australia's third-largest goods and services export market. It had maintained this position at the end of 2008–09, with goods and services exports totalling $21.1 billion. In 2008–09, the value of goods exports to the ROK increased 35 per cent to $19.3 billion, led by extraordinary increases in the value of coal (up 196 per cent) and iron ore (up 68 per cent), primarily due to higher contract prices in 2008. Minerals, metal and energy accounted for 87 per cent of Australian goods exports to the ROK in 2008–09, led by coal ($7.0 billion), iron ore ($3.4 billion) and crude petroleum ($2.3 billion). The ROK is Australia's third-largest beef export market, with exports valued at over $595 million in 2008–09 — down 22 per cent on 2007–08 due to increased competition from US beef exports after the lifting of a ROK BSE-related ban in mid-2008. While the value of goods exports month-by-month has fallen significantly from the peak attained towards the end of 2008, the value of goods exports from January to August 2009 was over five per cent higher than the same period in 2008.
In the services sector, Australian exports amounted to A$1.83 billion in 2008–09. Tourism and education-related travel accounted for the bulk of this. Education has been particularly successful, with the ROK ranked as Australia's third largest source of foreign enrolments (after China and India). There were 35,376 enrolments by students from the ROK in Australian institutions in 2008 (a two per cent increase from 2007). The Australian Education International (AEI) supports the education industry by maintaining a high-profile presence for Australian education and training in the ROK and promotes Australian capabilities and qualifications. Australia's export of education-related travel services to the ROK in 2008 totalled A$1.1 billion. Tourism is also very important, with 193,200 ROK visitor arrivals in Australia in 2008–09 (Australia's 8th largest source of arrivals). In 2008, 37,900 Australian tourists listed the ROK as their primary overseas destination, up 14.8 per cent from 2007.
Tariffs and other measures affecting agricultural imports to the ROK tend to be quite restrictive. The ROK is engaged in the Doha Development Agenda Round of WTO negotiations, which aims to reduce tariffs on imports, including the agricultural sector. The ROK's agricultural sector is currently undergoing gradual structural reform to increase its efficiency and enable it to compete with imported produce.
Australia's merchandise imports from the ROK increased in 2008–09 to $6.5 billion, largely due to an 87 per cent increase in refined petroleum imports to $1.2 billion. Major manufactured items showed declines in value: motor vehicles down 12 per cent, telecommunications equipment down 8.5 per cent and televisions down 16 per cent. Refined petroleum and passenger motor vehicles were Australia's largest import items from the ROK in 2008–09.
Australia-Korea Free Trade Agreement Negotiations
On 5 March 2009, Prime Minister Rudd and President Lee agreed to launch bilateral FTA negotiations. The first round of FTA negotiations was opened by Australian Trade Minister Crean and his ROK counterpart, Trade Minister Kim, during the Ministerial Joint Trade and Economic Commission in Melbourne on 18 May 2009. This was followed by four days of officials' discussions in Canberra. The second round of negotiations was held in Seoul from 31 August to 4 September 2009, and the third round was held in Canberra from 30 November to 4 December 2009.
Agreement to launch negotiations followed the April 2008 release of a joint non-government FTA feasibility study which found that an FTA between Australia and the ROK that removed substantially all barriers to trade and investment would offer significant opportunities to further strengthen the highly complementary bilateral relationship, and deliver gains to both countries through closer economic integration.
For more information on the FTA negotiations, visit the Australia-Korea FTA webpage.
Export opportunities
Despite the dominance of primary resources among Australian exports to the ROK, other opportunities exist in a diverse range of sectors, including green energy technologies, automobiles, biotechnology, building and construction, dairy products, defence, education and training, financial services, fruit and vegetables, information and communications technology, seafood, textiles and clothing, and wine.
Energy and Utilities: LNG
Australia's traditional trade in energy resources with the ROK is, broadly speaking, set to grow as the ROK's demand for energy rises. Coal and uranium are critical requirements for ROK power generation. The ROK is planning to increase the proportion of nuclear power generation, for greenhouse gas emission abatement purposes. LNG is the next strategic fuel for the ROK's economic growth and the ROK is the second largest importer of LNG in the world.
On 16 September 2009, Chevron Corporation announced the signing of a Heads of Agreement with Korea Gas Corporation (KOGAS) for the delivery of 1.5 million tonnes per annum (Mtpa) of LNG for 15 years from the Gorgon Project off the coast of Western Australia, with an option to extend for a further five years. Media reports valued the deal at $30 billion. KOGAS is the world's largest single importer of LNG, and is responsible for the majority of the ROK's LNG imports. On 10 September 2009, Chevron announced Sales and Purchase 0.5 Mtpa agreement with ROK buyer GS Caltex.
These deals are seen as a vote of confidence in Australia's long record as a dependable, stable and competitive supplier. They follow earlier an earlier agreement January 2003, where Australia won a contract to supply the ROK with more than three million tons of LNG over seven years. This contract has been extended until 2016.
In August 2008, the ROK released a long-term national energy road map, the National Energy Basic Plan 2008–2030. Measures announced subsequently under this plan foreshadow significant expansion of domestic LNG storage facilities. The government is pushing ahead with plans for a further 12 nuclear reactors and 19 thermoelectric power plants, to meet the ROK's rising energy demand, plus further investment in renewable energy and energy-efficiency measures.
In coal, uranium and LNG, Australia is a major world player and has the capacity and experience to supply the ROK's energy needs in a reliable fashion.
Wine
In recent years, ROK interest in wine has developed, resulting in a steep increase in wine imports from Australia since 2003.
Motor Vehicle Engines and Components
The ROK is an important market for Australian motor vehicles and components. In 2008, the Holden Caprice entered the South Korean market. An Australian automotive components producer has entered into a commercial arrangement with ROK partners for a joint venture manufacturing steering racks in the ROK. Furthermore, the Australian government has also appointed an automotive consultant to the ROK from 2009 to 2012, under the Automotive Market Access Program, to provide market opportunities to Australian automotive component companies.
Investment
The level of investment between Australia and the ROK is relatively small, but has grown significantly over the last decade. The ROK was Australia's 15th largest source of inward foreign investment in 2008 ($7.1 billion). The ROK was Australia's 20th largest destination for direct investment in 2008 ($7.4 billion). In mid 2008, Macquarie Bank reported it was the largest foreign investment presence in the ROK, active in funds management and infrastructure investment. The ANZ is also active.
Highlights have included Korea Zinc's A$1 billion investment in the Sun Metals Corporation refinery in Queensland in the late 1990s, and POSCO's A$16 million investment in 2002 in BHP-Billiton's iron ore resources in Western Australia. Currently, ROK investors are involved mostly in resource development (including in New South Wales coal mines) or in import and distribution (e.g. Hyundai, Daewoo, Kia, LG and Samsung).
Business and Financial Services
Growing exports of Australian financial services include infrastructure finance, banking and management advice. As mentioned above, Macquarie Bank and ANZ Bank maintain active commercial offices in Seoul.
Doing business in the ROK
Business success in the ROK market requires awareness of the opportunities available and an appreciation of how the market and culture operate. In addition, a well-placed and sourced personal introduction is helpful. Austrade's office in Seoul is able to assist.
For more information on doing business in the ROK and about specific export opportunities, see the Austrade website. As well as country-specific information, the Austrade website has a database that can be searched by industry.
Business Hours
Most businesses and government agencies in the ROK work a five-day week from Monday to Friday. Business hours are generally 9:00am to 6:00pm. Banks are open from 9:30am to 4:30pm on weekdays; major department stores are open from 10:30am to 7:30pm and smaller shops tend to open for longer hours.