Korea is already Australia's fourth largest export market for processed food and grocery products, worth A$1.8bn (US$1.64bn) in 2012-13, and it is expected the agreement will further increase this figure. Total trade between the two countries amounts to A$32bn (US$29bn) per year.
Under the terms of the agreement, tariffs will be eliminated on items such as beef, wheat, dairy, sugar, wine, seafood, grapes, cherries and mangos. Beef tariffs will be completely phased out over 15 years, and wine would gain immediate tariff-free status. However, it is unclear what concessions Australia has extended to individual major Korean companies.
"Independent modelling shows the agreement would be worth A$5bn (US$4.55bn) between 2015 and 2030 and boost the economy by around A$650 (US$592m) annually after 15 years,” Australian Prime Minister Tony Abbott had told parliament on the conclusion of the deal.
Congratulating the trade minister, Andrew Robb, and his negotiating team for the speedy conclusion of the FTA with Korea, for which negotiations began in 2009, chief executive of the Australian Food and Grocery Council Gary Dawson said the deal appeared to be a high-quality agreement that reduces tariffs to zero on a wide range of Australian food and grocery exports.
He added that the deal was a great example of Australia playing to its strengths in international trade to secure maximum value for high value-add exports as well as commodities.
"Food and grocery processing is Australia's largest manufacturing sector, with a turnover of A$111bn per annum and directly employing 300,000 people, half of them in rural and regional Australia,” Dawson said.
"This agreement will accelerate the growth of Australian food exports into Korea to meet growing demand from Korean consumers who value Australia's high quality food production.
"Improved market access into high-value markets like Korea is vital for the future of Australia's food and grocery sector. The benefits will flow to a broad range of Australian food and grocery manufacturing companies, large and small.”
However, if the deal had not been concluded, Australia would face losing market share to its competitors, Dawson added.
The agreement must now be ratified before its terms come into force.