President Park Geun-hye and Australian Prime Minister Tony Abbott met at Cheong Wa Dae on Tuesday as their trade ministers signed a bilateral free trade agreement.
Once the FTA goes into effect, Australia will immediately scrap five-percent tariffs on Korean-made cars with engines between 1,000 and 3,000 cc. Korean tariffs of 13 percent on Australian apparel including Ugg boots, which are popular among young women here, will be scrapped over three years, while tariffs on Australian beef will be abolished completely over the course of 15 years.
The government plans to seek National Assembly ratification of the FTA in the second half of this year.
Korea is the 11th country to sign an FTA with Australia, while Seoul has trade pacts with 48 countries. The combined GDP of the nations that have forged FTAs with Korea account for 57.3 percent of the global economy.
Cars accounted for 25 percent of Korea's exports to Australia last year, and the FTA is raising hopes that this will grow. Kim Tae-nyeon at the Korea Automobile Manufacturers Association said if the FTA goes into effect, the prices of Korean cars in Australia will fall by an average of US$700 per vehicle.
Kim added that this would greatly boost the competitiveness of Korean cars.
The Korea Trade-Investment Promotion Agency expects rising exports of Korean fiber-optic cables, electrical cables, batteries, air cleaners, aluminum materials, PVC flooring, car fenders, cosmetics and industrial ceramics.