Korean FTA takes shape

GM HOLDEN, Hyundai and Kia stand to gain the most from a free trade agreement (FTA) between Australia and South Korea if it eventuates following renewed trade talks announced by prime minister Kevin Rudd this week.

Mr Rudd said this week that he had reached in-principle agreement with South Korean president Lee Myung-bak for a free trade agreement during his first official visit to Korea following the Olympics opening ceremony, and that FTA negotiations would begin in Canberra by October as the federal government attempts to secure a $1 billion beef export market. South Korea is Australia’s fourth-largest trading partner.

“The advance I believe we have achieved in discussions today is for us both to agree to the principle of a free trade agreement,” said Mr Rudd after meeting with Mr Lee in Seoul.

“This is a big economic relationship, it’s pretty open, but we can make it more open. Remember when it comes to sale of education services, the sale of these technology products and investment in the economy like this [is] very important for Australia. We intend to make – let’s call it a modest first step,” he said.

Hyundai and its Kia subsidiary are South Korea’s largest car-makers, while GM Holden is the majority shareholder in GM Daewoo Auto & Technology, which produces the Holden Barina, Viva, Epica and Captiva.

The news follows federal trade minister Simon Crean’s confirmation this week that he will not support a tariff freeze for imported vehicles, pre-empting the major automotive industry review handed to government by former Victorian premier Steve Bracks on July 31.

PM Rudd is expected to announce its response to the Bracks review’s recommendations on issues including the scheduled reduction in passenger car import duty from 10 to five per cent in 2010, following his return to Australia.

Mr Crean revealed his position on automotive import tariffs while in Beijing for trade talks with Chinese officials, saying he remains committed to reviving the failed Doha round of trade talks, which require all participating nations to press ahead with trade liberalisation.

“There is a strong desire among World Trade Organisation members to conclude the Doha round,” said Mr Crean on August 10, adding a tariff policy reversal would send the wrong signal internationally.

“It would be odd if Australia were to suddenly signal that it wanted that unwound,” he said.