South Korean President Park Geun Hye signed a free trade deal with Australian Prime Minister Tony Abbott, seeking to deepen strategic ties and bolster commerce of cars, energy and natural resources.
The agreement signed today at Park’s office in Seoul will remove Australian tariffs on all South Korean gasoline-powered cars with engines of between 1 and 3 liters, including ones made by Hyundai Motor Co. (005380), once it takes effect, according to the South Korean trade ministry. Rice has been excluded from the deal while South Korea would phase out tariffs on all Australian beef over 15 years.
“I believe Australia is a very precious partner that has closely cooperated on the international stage while sharing fundamental values, and also a traditional ally that fought” for South Korea during the 1950-53 Korean War, Park told Abbott, according to a pool report on the presidential website.
Abbott, whose country sent soldiers to South Korea to participate in a military exercise led by U.S. and South Korean marines last month, said it was important for him to visit South Korea, Japan and China during his first trip to the region as prime minister, according to the report.
The three countries buy more of Australia’s iron ore, coal and other exports than the rest of its customers combined. Australia is South Korea’s biggest supplier of minerals and its sixth-largest trading partner, with two-way trade valued at $30.3 billion in 2013, South Korea’s trade ministry said in an e-mailed statement.
Abbott met yesterday with Japanese Prime Minister Shinzo Abe in Tokyo and agreed to lower or eliminate tariffs on everything from cars to canned tomatoes. Japan and South Korea together account for a third of Australia’s annual trade. Abbott is set to fly to Beijing tomorrow.
Today’s agreement, reached after nearly five years of negotiations, is expected to add 0.14 percent to South Korea’s growth domestic product over 10 years as it raises exports of heavy machinery, steel, and petrochemical products, the ministry said.
South Korea plans to seek ratification of the free trade deal in parliament in the second half of this year, chief South Korean negotiator Woo Tae Hee said yesterday at a briefing.
To contact the reporter on this story: Sam Kim in Seoul at email@example.com