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Republic of Korea (South Korea)

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Republic of Korea country brief

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 shared values and interests. People-to-people links between the two countries are growing and make a significant contribution to the relationship.

The ROK is Australia's fourth-largest two-way trading partner. Our economic relationship is supported by the Korea Australia Free Trade Agreement (KAFTA), which entered into force on 12 December 2014. We have a complementary trade relationship, with Australia exporting minerals, energy and travel and education services to the ROK, and importing passenger vehicles, petroleum, and electronic goods and parts. Services sector trade and the investment relationship are also growing from a low base.

Australia and the ROK share common strategic interests, particularly in seeking the peaceful denuclearisation of North Korea (see also DPRK country brief). Australia and the ROK are allies of the United States and both have made significant and practical contributions to efforts to strengthen regional security and stability, including sending troops to Afghanistan, Iraq and East Timor, and conducting counter-piracy operations. Cooperation between Australia and the ROK on international affairs has reinforced our strong trade relationship. Australia and the ROK are active members of the G20, Asia-Pacific Economic Cooperation (APEC), the East Asia Summit (EAS) and "MIKTA" (Mexico, Indonesia, Korea, Turkey and Australia).

History

An independent Korean state or group of Korean states has existed almost continuously for several millennia. Between its initial unification in the 7th century – from the three kingdoms of Goguryeo, Baekje, and Silla – until 1910, Korea existed as a single independent country. From 1910 to 1945, the Korean peninsula was subject to Japanese colonial rule. Following Japan's defeat in World War II, Korea was temporarily divided into two zones of occupation, with the United States administering the southern half of the peninsula and the Soviet Union administering the area north of the 38th parallel. Initial plans to unify the Peninsula under a single government quickly dissolved due to domestic opposition and the politics of the Cold War. In 1948, new governments were established in each occupied zone – the ROK in the south and the Democratic People's Republic of Korea (DPRK) in the north.

From the outset, the ROK and the DPRK operated under vastly different political, economic and social systems. Unresolved tensions created by the division led to the Korean War of 1950-1953, sparked by a DPRK invasion of the ROK. An armistice in 1953 ended the fighting but a more comprehensive peace agreement has not been negotiated.

Political overview

Government and administration

Since its establishment in 1948, the ROK has maintained a presidential system (except for a brief period when a parliamentary system was in place between June 1960 and May 1961). Under the presidential system, power is shared by three branches: the executive (headed by a president), the legislature (a single-house National Assembly) and the judiciary.

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 do not need to be members of the National Assembly) and the heads of executive agencies. The president is also commander-in-chief of the armed forces. The president is limited to serving a single five-year term.

Legislative power is vested in the unicameral National Assembly of the Republic of Korea, comprising 300 members elected for a four-year term. The current National Assembly includes 253 members elected by popular vote, with the remaining 47 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 most recent National Assembly election was held on 13 April 2016, with the next due in April 2020.

On 10 May 2017, Moon Jae-in of the Minjoo Party was inaugurated as the 19th President of the ROK, following an election to replace his predecessor Park Geun-hye, who was impeached by the National Assembly and removed from office following allegations of bribery and abuse of power.

More detailed information on the ROK's system of government can be found at the official ROK Government website.

Foreign relations

Since the Korean War, the ROK has been preoccupied with the military threat from the DPRK and has been closely allied with the United States to guarantee its security. At present, the United States maintains around 28,500 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 the DPRK. Over time, 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.

The ROK joined the UN in September 1991 (as did the DPRK) and the Organisation for Economic Co-operation and Development (OECD) in 1996. The ROK is a member of the World Trade Organization (WTO), regional fisheries organisations, UN agencies and regional organisations such as APEC, the ASEAN Regional Forum (ARF), the East Asia Summit (EAS) and the Forum for East Asia – Latin America Cooperation (FEALAC). In 2010, it chaired the G20, culminating in the Seoul G20 Summit in November 2010. It also takes part in the Asia-Europe Meeting (ASEM) and is a dialogue partner of the Pacific Islands Forum. In 2009, the ROK joined the Proliferation Security Initiative. It also joined the OECD's Development Assistance Committee (OECD-DAC) in November 2009, signalling its support for the international consensus on principles of good donorship and aid effectiveness. It hosted the Fourth High-Level Forum on Aid Effectiveness in Busan in 2011, which established the Global Partnership for Effective Development Cooperation. The ROK hosted the second Nuclear Security Summit in March 2012 in Seoul. From May to August 2012, the ROK held Expo 2012 in Yeosu focused on global oceans, involving 105 participating countries and over 8 million visitors. In May 2015 Seoul hosted the fifth MIKTA Foreign Ministers' Meeting. The first Asia-Pacific Parliamentarian Forum on Global Health was held in Seoul in July of 2015. The ROK hosted the 2018 Pyeongchang Winter Olympics in February 2018.

Bilateral relations

Australia and the ROK are natural partners as democracies with complementary economies and common strategic interests.

The first recorded contact between Australia and Korea took place in 1889, when missionaries from Australia landed at Busan. Australian photographer George Rose travelled the length of the peninsula in 1904 and photographed the country and people. Today, his images of everyday Korean life, clothing and customs form a valuable part of Korea's documentary history.

The Australia–ROK 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). Approximately 17,000 Australian troops served under UN command (1950-56) and 340 Australians died during the Korean War. Australian veterans of the Korean War regularly travel to the Republic of Korea as part of the Ministry of Patriots and Veterans Affairs (MPVA) sponsored Veterans revisit program.

Australia and the ROK established full diplomatic relations in 1961. The ROK Consulate-General in Sydney (opened in 1953) was elevated to embassy status with a chargé d'affaires from January 1961 and the first ambassador in place from April 1962 (later, the ROK moved the Embassy to Canberra). In June 1962, Australia opened its Embassy in Seoul.

People-to-people links, supported by a large and growing Australian Korean community, are strong and growing, and the bilateral trade and investment relationship is complementary, longstanding and robust. Marking the 50th anniversary of diplomatic relations, the governments of Australia and the ROK designated 2011 as a "Year of Friendship."

Development cooperation

A Memorandum of Understanding on Development Cooperation between Australia and the Republic of Korea was signed in Seoul on 16 December 2009. This Memorandum provides a framework for greater cooperation on development assistance.

Memorandum of Understanding on Development Cooperation between Australia and the Republic of Korea [PDF 15 KB]

The MOU recognises the ROK as an important emerging development partner in Asia and the Pacific. Australia and the ROK have held five High Level Consultations on development cooperation in the nine years since the signing of the MOU (most recently in March 2019). Both countries are working together to explore ways to strengthen practical collaboration, with a focus on the Indo-Pacific and strengthened development effectiveness.

Security cooperation

Australia and the ROK share key security interests in North Asia and the Indo-Pacific region, with peace and stability on the Korean Peninsula critical to the economic prosperityand security of both countries. Both support a nuclear-free Korean Peninsula and advocate for the continued commitment of the United States to the Indo-Pacific.

Australia is the only country, other than the United States, to hold a 2+2 ministerial meeting with the ROK.Then Foreign Minister Julie Bishop and then Defence Minister Marise Payne participated in the third 2+2 Foreign and Defence Ministers' Meeting in Seoul on 13 October 2017. The Ministers affirmed the strength of the relationship and committed to further enhancing bilateral cooperation across a range of areas.

Joint statement: Republic of Korea-Australia Foreign and Defence Ministers 2+2 Meeting

On 11 September 2015, then Foreign Minister Bishop and then Defence Minister Kevin Andrews, hosted their then counterparts Foreign Minister Yun Byung-se, and Minister for National Defense Han Min-koo, at the second 2+2 Foreign and Defence Minister's Meeting in Sydney. At this meeting, the Ministers agreed a Defence and Security Blueprint that implements an agreed Vision Statement. The Blueprint lists areas for practical security and defence cooperation between Australia and the ROK, including increased patterns of bilateral and joint exercises.

Blueprint for Defence and Security Cooperation Between Australia and the Republic of Korea

Australia's security cooperation with the ROK continues to expand in practical ways. The Australian Defence Force (ADF) regularly deploys aircraft, ships and personnel to participate in a number of exercises with the ROK. Australia and the ROK have also cooperated under the multinational Proliferation Security Initiative (PSI) since the ROK joined the PSI in 2009. In addition to joint Foreign and Defence Ministers' Meetings, security issues are discussed regularly by the two countries, including at regular Defence Ministerial Dialogues, in Political-Military Talks between senior foreign ministry and defence officials, and in Defence Policy Talks. Additionally, each service (Navy, Army and Air Force) holds an annual staff dialogue with their ROK counterparts. The Royal Australian Navy makes regular ship visits and has participated in three bilateral maritime exercises with the ROK Navy, referred to as Exercise HAEDOLI WALLABY.

Economic overview

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 largely based around agriculture. 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 was comparable with those of the poorer countries of Asia and Africa. Sustained high economic growth since the 1960s, supported by significant US investment, has enabled the ROK's transformation into a highly industrialised and internationally competitive economy. In 2017, the ROK was the 12th-largest economy on a nominal GDP (USD) basis or the 30st-largest economy on a nominal per capita basis.

The ROK was one of the few OECD countries besides Australia to record growth and not enter into recession after the global financial crisis of 2009. Factors supporting this included the rapid devaluation of the Korean won, providing exporters with a significant buffer, and a series of government fiscal stimulus packages. The ROK economy continues to grow relatively strongly, mainly owing to export demand (accounting for 43 per cent of GDP in 2017), with average annual growth of 3.0 per cent over the past five years. Real GDP growth was 2.9 per cent in 2016 and 3.1 per cent in 2017. The ROK's growth outlook for 2018 is 2.8 per cent.

Long-term, the ROK economy faces the challenge of structural pressures: it has an ageing population and low birth-rate, has low service-sector productivity and faces increasing competition in global markets, particularly from emerging exporters.

Trade and investment

Trade

Australia's trade relationship with the ROK developed rapidly during the 1960s as the ROK pursued industrialisation requiring large amounts of raw materials. The two countries have a complementary trade relationship, with Australia providing raw materials, manufactured products and food to the ROK, and importing products such as cars, telecommunications equipment and computers, as well as refined petroleum.

The ROK is Australia's fourth-largest overall trading partner. Two-way goods and services trade was worth around $52.3 billion in 2017-18, representing 6.6 per cent of all of Australia's international trade. The significant increase in the value of trade between Australia and the ROK from 2016-17 to 2017-18 is the result of a one-off importation of major LNG floating platforms produced in the ROK for Australia's Inpex Ichthys and Prelude LNG Projects. As such, a normalisation of trade volumes in 2018-19 is to be expected. The ROK was Australia's third-largest market for goods and services exports combined in 2017-18, totalling $23.7 billion. As well as coal, iron ore, LNG and aluminium, the ROK remains an important market for Australian beef, sugar and wheat.

The ROK is Australia's third-largest source of goods and services imports totalling $28.7 billion in 2017-18.The primary imports from the ROK in 2017-18 were ships, boats & floating structures (the aforementioned Ichthys LNG platforms), refined petroleum, passenger motor vehicles, and electrical machinery and parts. Total bilateral trade in services during 2017-18 was valued at $3.0 billion; services exports were worth $2.1 billion, mostly education-related and recreational travel.

The Korea-Australia Free Trade Agreement (KAFTA) entered into force on 12 December 2014. KAFTA is one of Australia's most comprehensive trade agreements, delivering significant improvements in market access and tariff liberalisation for merchandise trade. Under KAFTA, Australian services providers receive the best treatment the ROK has agreed with any trade partner. Investment commitments in the agreement protect and enhance investment in both directions.

Business links are supported by the Korea-Australia Business Council and the Australia-Korea Business Council. Their annual joint meeting allows members to exchange views and expand private sector links between the countries.

Investment

The level of investment between Australia and the ROK is small but growing. ROK investment into Australia has grown from $4.9 billion in 2006 to $26.3 billion by the end of 2017, but the ROK still only ranks as Australia's 15th-largest foreign investor, representing only 0.8 per cent of Australia's total foreign investment stock. This investment is beginning to diversify into other areas such as tourism and real estate from a dominant focus on the resources, energy and electronics sectors. Australian investment into the ROK was $19.9 billion at the end of 2017, representing 0.9 per cent of Australian investment abroad. The ROK is the 14th-largest destination for Australia's foreign investment abroad.

Australian financial services providers in the ROK are active in areas including funds management and infrastructure investment. The state-owned Korean Development Bank opened its first Australian office on 8 December 2015 in Sydney in order to manage its growing Australian portfolio. A higher Foreign Investment Review Board threshold under KAFTA may encourage Korean private investment in Australia and the Asia Region Funds Passport will further improve the bilateral investment climate.

Major ROK investments in Australia are concentrated in the resources sector. POSCO, a ROK owned steel-making company, is a significant investor in Australian resources with investments totalling $2.2 billion across 9 projects. POSCO holds a 12.5 per cent share in the $6 billion iron ore project at Roy Hill in Western Australia. The Korean Gas Corporation (KOGAS) holds a 15 percent stake in the Gladstone LNG project valued at $600 million and a 10 per cent stake in the Prelude LNG project valued at $1.5 billion. The ROK's $600 billion sovereign pension fund, the National Pension Service, has shown increasing interest in investing in Australian real estate and infrastructure assets. In 2016, it acquired a $500 million share in a 50 year lease of the Port of Melbourne. Other major Korean companies such as Korea Zinc, KEPCO, SK Energy and KORES have also invested in Australia.

Information on doing business and opportunities in the Republic of Korea

People-to-people and institutional links

Australia's economic and strategic links with the ROK are underpinned by extensive people-to-people and institutional links. In the 2016 Census, almost 100,000 Australian residents claimed Korean ancestry. The ROK is Australia's seventh-largest source of international students, with 21,800 Korean students studying in Australia in 2018. More than half of these students are enrolled in vocational education and training. In 2016, Australian Universities reported there were almost 300 formal university partnerships between Australian and ROK institutions. The ROK is the fourth-largest group of working holiday-makers and tenth-largest market of short-term visitors to Australia. In 2019, nine New Colombo Plan (NCP) scholars have been selected to study in the ROK, bringing the total number of NCP scholars who have studied in the ROK to 47. In 2019, 334 mobility students will also study in the ROK under the NCP Mobility Program, bringing the total number of ROK NCP mobility students to 1362.

Australian artists, performers and cultural institutions are building links with ROK partners, recognising the strong, distinctly Korean contributions being made to worldwide culture by ROK artists building on their rich cultural heritage and using traditional methods and sophisticated technology.

The ROK has the potential to become a major research partner for Australia, particularly as the ROK focuses on innovation to drive its economic growth. A solid foundation of bilateral cooperation exists, yet there is much scope to increase collaboration, particularly in connecting Australia's strength in basic research and the ROK's expertise in applied research and commercialised innovation.

The Australia-Korea Foundation (AKF) advances Australia's engagement with the ROK by running annual grant round to fund projects supporting cultural and academic pursuits, business and community exchanges, and partnerships and collaborations.

People-to-people links have also been fostered through sister-city relationships, such as those between Townsville, QLD and Suwon; Parramatta, NSW and Jung-gu; Burwood, NSW and Geumcheon-gu; and most recently Strathfield, NSW and Gapyeong County. Sister-state relationships include those between Queensland and Gyeonggi Province, New South Wales and Seoul, South Australia and Chungnam Province, and Victoria and Busan (which celebrated its 20th Anniversary in 2014).

High-level visits

Government contacts

Australia-ROK high-level contact is substantial, with regular meetings and contact between leaders and senior ministers. Below is a summary of recent high-level visits.

In May 2019 Her Excellency, Pi Woo-Jin, ROK Minister of Patriots and Veterans Affairs, visited Melbourne for the unveiling ceremony of the Korean War Memorial in Quarry Park, Footscray. Minister Pi was received by Victorian Governor, the Hon. Linda Dessau AC.

Prime Minister Morrison met with President Moon in Papua New Guinea on 17 November 2018.

Foreign Minister Payne met with Foreign Minister Kang at the MIKTA Foreign Ministers' meeting on 27 September 2018 in New York.

Then Foreign Affairs Minister Julie Bishop and then Defence Minister Marise Payne met their respective counterparts, Foreign Minister Kang Kyung-wha and then National Defense Minister Song Young-moo during the third Foreign and Defence Ministers' 2+2 Meeting in Seoul on 13 October 2017.

The Minister for Finance, Senator Cormann visited Seoul from 11-13 October 2017 and held bilateral meetings with government and business leaders, including the former Trade Minister, Dr Joo Hyunghwan, and the Chairman of the Korean Financial Services Commission.

Then Defence Minister Marise Payne met Prime Minister Lee Nak-yeon and then National Defense Minister Song Young-moo on 7 September 2017, when she visited Seoul to deliver the Keynote Address for the 6th Seoul Defence Dialogue.

Then Foreign Affairs Minister Julie Bishop met with former President, Lee Myeong-bak, former Foreign Minister Yoo Myeong-hwan, and the then Director of National Security, Kim Kwan-jin during a visit to Seoul and Busan from 17-19 February 2017.

Recent high level visits to Australia include that by the ROK Presidential Special Envoy to Australia and ASEAN, Chung Dong-chea, who visited Canberra on 19 June 2017 where he met with then Prime Minister Turnbull and then Foreign Minister Bishop.

Last Updated: 14 May 2019
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