World Trade Organization
WTO Trade Policy Review of Republic of Korea 2021 - Australia Statement
13 and 15 October 2021
On behalf of Australia, I warmly welcome Deputy Minister Kim and the delegation from Korea, and thank the discussant, Ambassador Francke of Chile. The strong economic relationship between Australia and the Republic of Korea (ROK) is a clear example of the benefits of trade in allowing countries to follow their comparative advantages, with benefits flowing to their citizens. Australia is a major supplier of iron ore, coal, LNG, beef and aluminium to the Korea. And the Korea is a major supplier of passenger vehicles and refined petroleum to Australia. As a consequence, we have seen steady growth in two-way trade, with the unusual decline in 2020 to AUD35 billion (from AUD41 billion in 2019) reflecting COVID-19 related trade impacts. Overall, Korea was Australia’s 4th largest goods and services two-way trading partner in 2020.
The Korea-Australia Free Trade Agreement has been vital in strengthening this economic relationship, as demonstrated by high utilisation rates on both sides. Australia and Korea are examining options to further expand and diversify our economic relationship as we elevate the bilateral relationship to a Comprehensive Strategic Partnership.
Korea, like Australia, is on track to ratify RCEP by the end of 2021. And Australia continues to engage informally with Korea on its interest in accession to the CPTPP.
Australia commends Korea's plan for a ‘Korean New Deal’ to aid its COVID-19 economic recovery, focusing on digital infrastructure and human capital green initiatives to drive future economic development and reduce emissions. We expect to soon agree a Low Emissions Technology Partnership. Australia has also been pleased to work with Korea in exploring opportunities for liberalisation of environmental goods and services trade in the WTO, including through the Trade and Environmental Sustainability Structured Discussions (TESSD) and exploratory market access discussions in the Council for Trade in Services.
Australia and Korea agree on the importance of resilient supply chains amid the COVID-19 pandemic and beyond. We are both cosponsors of the Trade and Health Initiative, to support the trade of essential medical products. We want to work with Korea on supply chain resilience in other areas, including critical minerals.
Australia encourages Korea to consider the potential to reduce tariffs and simplify its tariff structure. We note Korea's average applied MFN tariff rate remains high and its tariff structure has changed little since the last review. The WTO Secretariat’s report notes that reducing high tariffs, particularly for agricultural products, would improve Korea's resource allocation and national welfare.
Trade in services represents an important potential growth engine for the Korean economy, but this sector continues to be underdeveloped, with services sector productivity lagging the OECD average. Further services liberalisation, and enhancing transparency and modernisation of services domestic regulation, would enhance Korea’s global competitiveness, support foreign investment and create jobs.
Australia notes state-owned enterprises continue to play a major role in Korea particularly in the energy sector where prices are often regulated. The liberalisation of Korea's energy and resources sector would represent an opportunity to increase competition and boost efficiency, provide more options for Korean consumers, move towards market-based tariffs and facilitate foreign investment.
On investment, Australia notes that Korea's inward foreign direct investment remains amongst the lowest in the OECD despite the Korean government's efforts to promote and attract FDI. Ongoing concerns by business regarding the regulatory environment in Korea, including the complexities of registration, notification, licensing and approval requirements, appear to be impeding foreign direct investment. Australia looks forward to continuing to share experiences with Korea on enhancing regulatory transparency and streamlining regulatory procedures.
Australia commends Korea's trade facilitation efforts, which have been recognised internationally. Australia appreciates Korea's constructive contributions to the WTO trade facilitation discussions and looks forward to working further with Korea in the TFA’s ongoing improvement, including in advance consultation, streamlining border procedures and interagency cooperation. We welcome the Korea’s leadership in supporting plurilateral rulemaking, particularly its role in the services domestic regulation JSI, and its constructive engagement in the E-commerce JSI.
In relation to agriculture, Australia urges Korea to work constructively with stakeholders and in accordance with its WTO transparency obligations to minimise potential trade disruptions arising from the development of a positive list system for pesticides and agricultural veterinary chemicals residue limits. We urge Korea to implement arrangements that remove duplication and costs for trading partners, for example through foreign facility audits being conducted jointly by Korean regulators.
Australia looks forward to continuing to work closely with Korea to strengthen the rules-based multilateral trading system and deepen our bilateral economic relationship. To conclude, Chair, let me wish Korea and the delegation a very successful trade policy review.