11/26/13 Australia`s Ambitious Free Trade Agenda | The Diplomat

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Australia's Ambitious Free Trade
Agenda
Canberra wants to conclude deals with three
East Asian giants, starting with Korea. t faces
some significant hurdles.
TIe currenL IoL LopIc In IoreIgn und Lrude poIIcy ouL oI
Cunberru seems Lo be LIe concIusIon oI Iong-unLIcIpuLed
Iree Lrude ugreemenLs wILI LIe norLIeusL AsIun gIunLs oI
CIInu, Jupun und Koreu.
SIorLIy uILer Ier uppoInLmenL us IoreIgn mInIsLer, JuIIe
BIsIop conIIrmed LIuL |e|xpedILIng LIe concIusIon oI Iree Lrude ugreemenLs wILI SouLI Koreu, Jupun und CIInu
Is u IIrsL order prIorILy oI LIe AbboLL GovernmenL. SucI enLIusIusm Ius munIIesLed ILseII In LIe Iorm oI
proucLIve, economIc dIpIomucy, us BIsIop compIeLed u wIIrIwInd Lour oI LIe regIon wIere sIe meL wILI
counLerpurLs In Jupun, Hong Kong und Koreu. SIe wIII Ieud Lo CIInu In LIe new yeur.
WIIIe LIe CouIILIon governmenL's objecLIve oI concIudIng TAs wILI Jupun, Koreu und CIInu wILIIn u yeur Is
udmIrubIe, LIe ubIIILy Ior LIe governmenL Lo concIude negoLIuLIons wILI LIe LIree counLrIes - wIIcI beLween
LIem Iuve been In LuIks wILI Cunberru Ior more LIun Lwo decudes - Is In quesLIon. Some observers worry LIuL ILs
LIgIL deudIIne Is Loo umbILIous und rIsks producIng TAs LIuL onIy purLIuIIy IuIIIII LIe InLeresLs oI LIe
sIgnuLorIes.
As TA negoLIuLIons beLween AusLruIIu und Koreu IusL upproucI LIeIr IIILI yeur, uLLenLIon Is now LurnIng Lo
Cunberru's ubIIILy Lo concIude u deuI wILI SeouI. GIven Koreu's recenL success In sIgnIng TAs wILI LIe U.S., EU
und ASEAN IeuvyweIgILs, u muLuuIIy suLIsIucLory ugreemenL wILI AusLruIIu Is noL beyond LIe reuIms oI
possIbIIILy. Koreu's envIubIe coIIecLIon oI ucLIve TAs uIreudy covers 6o percenL oI LIe gIobuI economy, noL Lo
menLIon LIe ugreemenLs sLIII beIng negoLIuLed LIuL ure expecLed Lo uILImuLeIy cover upproxImuLeIy qo percenL oI
LIe counLry`s Lrude ucLIvILy.
The Time Is Right
BoLI AusLruIIu und Koreu ure enLIusIusLIc ubouL expundIng LIeIr Iree Lrude neLworks und LIe beneIILs oI u TA
beLween LIe Lwo counLrIes ure reudIIy uppurenL.
Koreu Is currenLIy AusLruIIu`s LIIrd IurgesL exporL murkeL und AusLruIIu`s IourLI IurgesL LrudIng purLner. n LIe
IusL decude, Koreun InvesLmenL In AusLruIIu Ius grown exponenLIuIIy us AusLruIIu IncreusIngIy runks us one oI
Koreu`s Lop InvesLmenL desLInuLIons. SInce zo11, LIe vuIue oI InvesLmenL proposuIs by Koreun compunIes In
AusLruIIu Ius reucIed more LIun $. bIIIIon ucross LIe mInIng und resources, renewubIe energy, InIrusLrucLure,
commercIuI properLy und ugrIbusIness secLors.
More und more, AusLruIIun compunIes ure uIso LurnIng Lo Koreu Lo unIock u runge oI InvesLmenL und growLI
opporLunILIes. n recenL yeurs, repuLed AusLruIIun brunds sucI us MucquurIe Bunk, ANZ, RIo TInLo, BHP BIIIILon
und BIuckmores Iuve uII esLubIIsIed operuLIons on LIe penInsuIu.
AusLruIIu's sLrong economIc reIuLIonsIIp wILI Koreu uIso LrunsIuLes InLo poIILIcuI IumIIIurILy. As one oI LIe IIrsL
counLrIes Lo come Lo Koreu's uId uL LIe ouLseL oI LIe Koreun Wur, Koreu und AusLruIIu conLInue Lo operuLe us
ImporLunL mIddIe power purLners sIurIng sImIIur vuIues und InLeresLs on LIe worId sLuge. Numerous sLuLe vIsILs
Lo Koreu by Iormer AusLruIIun PrIme MInIsLer JuIIu GIIIurd, LIe recenL IosLIng oI LIe oreIgn und DeIence
MInIsLers' (z+z) MeeLIng In SeouI, und MInIsLer BIsIop`s prIorILIzIng oI un eurIy vIsIL Lo Koreu, uII LesLIIy Lo
successIve AusLruIIun governmenL vIsIons Ior un enIurged roIe Ior AusLruIIu-Koreu reIuLIons.
So wIy, LIen, uImosL IIve yeurs Irom LIe commencemenL oI LIe IIrsL round oI negoLIuLIons, Ius u muLuuIIy
By jarrad Harvey
October 29, 2013
11/26/13 Australia`s Ambitious Free Trade Agenda | The Diplomat
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suLIsIyIng TA yeL Lo be IormuIIzed?
Pressore Points
WIIIe u runge oI burrIers prevenLIng LIe concIusIon oI un ugreemenL Iuve been cILed by commenLuLors,
overwIeImIngIy, probIems reIuLe Lo IundumenLuI dIIIerences beLween AusLruIIu und Koreu's economIes
LIemseIves.
GIven LIe ubundunce oI nuLuruI resources In AusLruIIu, IL Is unsurprIsIng LIuL AusLruIIu wunLs Lo ensure LIe besL
deuI Ior ILs proIILubIe ugrIcuILuruI und oLIer ruw exporL goods. AusLruIIun beeI remuIns consIsLenLIy popuIur wILI
Koreun consumers, und ILs beeI ImporLers now enjoy upproxImuLeIy z percenL oI Koreun murkeL sIure. TIIs Is
In conLrusL Lo US beeI - unoLIer IuvorILe wILI Koreun consumers-wIIcI LruIIs AusLruIIu occupyIng 6 percenL oI
LIe counLry's beeI murkeL.
TIougI AusLruIIun Iurmers ure reIIsIIng sLubIe und IucruLIve Koreun beeI exporLs, LIe LIde seems Lo be gruduuIIy
LurnIng Ior LIe proIILubIIILy oI AussIe beeI. As Koreu IusL negoLIuLes TAs wILI mujor gIobuI economIes,
AusLruIIu`s producL Is becomIng Iess compeLILIve. TurIIIs conLInue Lo urLIIIcIuIIy Increuse LIe prIce, meunIng LIuL
oLIer mujor beeI ImporLers, ussIsLed by Iow negoLIuLed LurIIIs, ouLperIorm AusLruIIun ImporLs on u cosL busIs.
oIIowIng LIe recenL concIusIon oI LIe Koreu-UnILed SLuLes ree Trude AgreemenL (KORUS TA), U.S. beeI
ImporLs ure guInIng un edge In Koreu us U.S. cuLLIemen enjoy u .z percenL LurIII udvunLuge over AusLruIIun
beeI und veuI producLs.
True Lo ILs sLrengLI In IurmIng und ugrIcuILure, AusLruIIu Is uIso InLenL on negoLIuLIng LIe besL deuI on sugur und
duIry exporLs. Ike beeI, AusLruIIu`s sugur und duIry producLs und by-producLs ure IusL becomIng uncompeLILIve
compured Lo LIe prIces secured by oLIer ImporLIng powers, sucI us LIe U.S. und LIe EU, wILI wIom Koreu Ius
sIgned TAs IoIIowIng uggressIve negoLIuLIons.
WIIIe AusLruIIu ensures ILs ugrIcuILuruI und oLIer prImury IndusLry exporLs receIve LIe besL LreuLmenL under uny
TA wILI Koreu, IL`s noL jusL AusLruIIu LIuL Is IILLIng wuIIs In LIe Lrude negoLIuLIons Ior un AusLruIIu-Koreu
TA.
Koreu`s InsIsLence on LIe IncIusIon oI un nvesLor SLuLe DIspuLe SeLLIemenL (SDS) cIuuse In un AusLruIIun TA
Ius proven Lo be u purLIcuIurIy sensILIve LopIc Ior negoLIuLors In SeouI. SucI u cIuuse wouId expose AusLruIIu Lo
IeguI ucLIon II, Ior exumpIe, IL were Lo muke u poIIcy decIsIon or enucL u Iuw conLrury Lo LIe Lerms oI un In-Iorce
TA. L Is undersLundubIe, Iowever, LIuL AusLruIIu`s IurgesL LrudIng purLners IIke Koreu (und LIe U.S. beIore LIe
concIusIon oI LIe AusLruIIu-UnILed SLuLes TA) wouId wunL some Iorm oI sureLy LIuL LIeIr Lrude ucLIvILy wILI
AusLruIIun compunIes wIII noL be dIsrupLed by udverse governmenL decIsIons.
To muke muLLers more compIIcuLed, In LIe pusL, AusLruIIun Lrude negoLIuLors Iuve upproucIed LIe Issue oI
IncIudIng sucI SDS cIuuses In TAs IL negoLIuLes In un ud Ioc munner. ndeed, In Ier uddress uL LIe AusLCIum
BusIness BreukIusL In SeouI IusL week, BIsIop udmILLed LIuL |L|Iey |SDS cIuuses| exIsL In some oI our TAs und
noL In oLIers. . LIey sIouId be negoLIuLed on u cuse-by-cuse busIs.
DespILe BIsIop cIuImIng LIuL AusLruIIu wIII consIder Iow |IL| cun negoLIuLe LIe nvesLor SLuLe DIspuLe
SeLLIemenL cIuuse wILI Koreu, uny IncIusIon oI u cIuuse runs LIe rIsk oI sourIng reIuLIons wILI AusLruIIu`s
exIsLIng LrudIng purLners, IIke LIe U.S., wIo do noL enjoy LIe proLecLIons oIIered by un SDS cIuuse In LIeIr TAs
wILI AusLruIIu. WIIIe IncIudIng un SDS cIuuse wouId IIgIIIgIL LIe ImporLunce LIuL LIe new AusLruIIun
GovernmenL pIuces on ILs reIuLIonsIIp wILI Koreu LIe IncIusIon oI sucI u Lerm uIso rIsks esLubIIsIIng u
dungerous precedenL Ior LIe IncIusIon oI u sImIIur dIspuLe resoIuLIon Irumework In AusLruIIu`s IuLure TAs.
L Is unsurprIsIng LIuL Koreun negoLIuLors Iuve uIso pusIed Ior LIe ruIsIng oI LIe IoreIgn InvesLmenL revIew
LIresIoId Lo AUD$1 bIIIIon ($q1 mIIIIon), up Irom LIe currenL AUD$zq8 mIIIIon, uILer WusIIngLon secured un
Increused LIresIoId wILI LIe sIgnIng oI LIe AUSTA In IuLe zooq. TIIs wouId enubIe Koreun InvesLors Lo
ucquIre InLeresLs In AusLruIIun compunIes und usseLs Lo u vuIue oI up Lo AUD$1 bIIIIon, uILer wIIcI LIey wouId
Iuve Lo seek upprovuI Irom AusLruIIu`s oreIgn nvesLmenL RevIew Bourd und uILImuLeIy, LIe AusLruIIun
Treusurer.
NeverLIeIess, II AusLruIIu`s CouIILIon governmenL exLended LIe prIvIIege oI u U.S.-sLyIe ruIsed InvesLmenL revIew
LIresIoId Lo Koreu, IL muy prompL u domIno eIIecL oI demunds wILI oLIer counLrIes yeL Lo IInuIIze un ugreemenL
wILI AusLruIIu (cue CIInu). SucI u decIsIon by LIe governmenL wouId IurLIer rIsk upseLLIng ILs couIILIon purLner,
LIe NuLIonuIs, wIo buuIked uL u recenL suggesLIon by Treusurer Joe Hockey, u IberuI, In WusIIngLon LIuL un
AusLruIIu-CIInu ree Trude AgreemenL couId be expedILed by LIe GovernmenL reIuxIng ILs eIecLIon promIse oI
IurLIer IowerIng AusLruIIu`s IoreIgn InvesLmenL LIresIoId.
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TIe IusL LIIng AusLruIIu wunLs Is u sILuuLIon wIere IL Is Iorced Lo cIoose beLween IrIends. YeL Cunberru`s oILen
IncoIerenL upproucI Lowurd negoLIuLIng Issues IIke dIspuLe seLLIemenL und IoreIgn InvesLmenL Ius LIe possIbIIILy
oI pIeusIng some und oIIendIng oLIers Lo AusLruIIu`s economIc und poIILIcuI deLrImenL.
OLIer IucLors Iuve uIso prompLed cuIIs Ior AusLruIIu Lo be more cIrcumspecL wIen negoLIuLIng TAs, purLIcuIurIy
wILI AsIun counLrIes. TIese IncIude dIIIerences In IeveIs oI concern Ior LIe envIronmenL, IeuILI und suIeLy
reguIuLIons, Iubor condILIons und Iower quurunLIne sLundurds. or LIe mosL purL, LIougI, gIven ILs sLuLus us u
weII-deveIoped counLry wILI u IIgI sLundurd oI IIvIng, sucI concerns do noL uppIy us mucI Lo Koreu us LIey
mIgIL Lo oLIer Iur Iess-deveIoped counLrIes In LIe regIon.
Action to Mutch Rhetoric
AusLruIIu und Koreu enjoy u sIured poIILIcuI ugendu, cooperuLIng us nuLuruI purLners und Lrue IrIends Lo udvunce
democrucy, prosperILy und sLubIIILy In LIe worId generuIIy, und wILIIn LIe AsIu-PucIIIc und Koreun penInsuIu
more specIIIcuIIy.
TIIs poIILIcuI cumuruderIe LrunsIuLes InLo u muLuuIIy supporLIve und IIgIIy compIemenLury Lrude reIuLIonsIIp.
AusLruIIu`s sLrengLI In producIng ruw goods conLInues Lo pIeuse Koreu`s ever-growIng uppeLILe Ior IIgI-quuIILy
AusLruIIun Iood, wIIIe u sLeudy IIow oI Koreun LecInoIogy und veIIcIe exporLs Lo AusLruIIu suppIemenLs u
sIumpIng AusLruIIun munuIucLurIng IndusLry weIgIed down by IIgI operuLIng cosLs und u compuruLIveIy smuII
popuIuLIon.
SeveruI opLIons ure uvuIIubIe Lo Cunberru`s negoLIuLors In seekIng Lo concIude un AusLruIIu-Koreu TA.
One opLIon Is Lo pursue u TA Ior purLIcuIur secLors ruLIer LIun u compreIensIve TA. NeverLIeIess, IInuIIzIng u
compreIensIve bIIuLeruI TA, wIIIe IeuvIng IILLIe IeIL Lo negoLIuLe In LIe IuLure, wouId be u Iong und proLrucLed
underLukIng wIIcI rIsks LIe IurLIer erosIon oI AusLruIIun exporLers` proIILs, noL Lo menLIon LIe sLrong murkeL
posILIon AusLruIIun goods sLIII enjoy In Koreu.
As Iormer AusLruIIun Ambussudor Lo CIInu GeoII Ruby Ius recenLIy proposed, AusLruIIun negoLIuLors muy muke
beLLer progress Lowurd LIe concIusIon oI ILs AsIun TAs by IImILIng LIe ureus In wIIcI LIey seek greuLer murkeL
uccess, suy Lo Iumb, beeI und duIry producLs. WIIIe poLenLIuIIy expedILIng LIe IInuIIzuLIon oI un ugreemenL, work
In LIe ureu oI sugur, wooI und some servIce exporLs wouId be IIkeIy Lo remuIn on LIe ugendus oI AusLruIIun
negoLIuLors In LIe IuLure.
AILernuLIveIy, AusLruIIu`s mIgIL Iessen ILs Iocus on LIe IormuLIon oI bIIuLeruI TAs, InsLeud cIoosIng Lo
preIerence LIe negoLIuLIon oI muILIIuLeruI ugreemenLs In wIIcI IL Is momenLurIIy enguged IncIudIng LIe Truns-
PucIIIc PurLnersIIp (TPP) und LIe RegIonuI CompreIensIve EconomIc PurLnersIIp (RCEP).
WIIIe IorecusL beneIILs oI joInIng LIe TPP IncIude LIe ImprovemenL oI regIonuI uccess urrungemenLs In counLrIes
wILIouL un ucLIve TA wILI AusLruIIu, IIke Cunudu, MexIco, Peru und VIeLnum, AusLruIIu Ius u compuruLIveIy
smuIIer voIce In LIose negoLIuLIons, wIere IL runs LIe rIsk oI IuvIng ILs vIews sIdeIIned on crILIcuI Issues IIke
servIces und ugrIcuILuruI exporLs.
TIougI LIe Lusk oI prIorILIzIng Lrude ugreemenLs Is uILImuLeIy u job Ior Cunberru, IL Is ImperuLIve LIuL IL does noL
IeL ILs regIonuI und Iree Lrude negoLIuLIons devoIve InLo u zero-sum gume wIereby LruIy beneIIcIuI und
compIemenLury Lrude deuIs, IIke LIe AusLruIIu-Koreu TA, sLumbIe on Issues IIke ugrIcuILure, dIspuLe seLLIemenL
und InvesLmenL revIew.
ndeed, IL Is LIme Ior Iurd words Lo be meL by Iurd ucLIons us boLI counLrIes Iocus LIeIr negoLIuLIons on doIng u
deuI LIuL Ius been neurIy IuII u decude In LIe mukIng.
1crrcd Hcrte is currentl c postrcducte in the Depcrtment oj Goternment & Internctioncl Relctions ct the
Unitersit oj Sdne. The tieus expressed here cre his oun.
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