SEOUL, (Xinhua) -- South Korea signed a free trade agreement (FTA) with Australia Tuesday, after five years of negotiations, to secure stable energy imports from the resources- rich country and expand its car exports in the hotly competitive market among Asian rivals.
South Korean Minister of Trade, Industry and Energy Yoon Sang- jick and his Australian counterpart Andrew Robb sealed the bilateral free trade pact in Seoul attended by President Park Geun- hye and Prime Minister Tony Abbott.
The Australian prime minister arrived in Seoul Tuesday morning to hold a summit with Park after visiting Japan to wrap up its separate FTA with Japan.
The Abbott government, which took office in September last year, promised to reach free trade deals with major Northeast Asian countries, including China, South Korea and Japan.
The two countries launched negotiations for the bilateral FTA in May 2009, and had held five rounds of talks until May 2010. The talks had since been halted for differences in investor state dispute (ISD) settlement, but the sixth round was resumed in November last year after five rounds of closed-door negotiations.
In December 2013, the two nations declared the free trade pact was actually reached following the seventh round of talks, and signed an initial agreement in February this year.
Australia became South Korea's 11th FTA partner, expanding the size of markets South Korea can access via FTAs in an easier manner to 57.3 percent of the total global GDP from the prior 55.2 percent.
South Korea has pushed to reach free trade deals for growth as exports account for around half of the economy. The country has inked FTAs with a total of 48 countries, including the 28-nationEuropean Union, the 10-member ASEAN, the United States and India as well as Australia.
Seoul's trade ministry said the FTA with Canberra will help South Korea stably secure mineral resources from the resources- rich country.
Australia is South Korea's largest mineral resource importer. As of 2013, the percentage of iron ore imported from Australia to South Korea reached 72 percent of the total, with those for coal, aluminum ore and zinc ore reaching 44 percent, 77 percent and 20 percent respectively.
The FTA will also help South Korean manufacturers, especially automakers, raise competitiveness in the Australian market where Asian rivals are competing fiercely, the ministry said.
Australia's portion of trade with China reached 20 percent of the total in 2012, trailed by ASEAN with 14.7 percent, Japan with 11.4 percent and South Korea with 5.1 percent.
South Korean automakers, including Hyundai Motor and Kia Motors, will benefit from the FTA, which will cut a 5 percent tariff on South Korean vehicles in Australia within three years after the FTA implementation. Import tariffs on gasoline-powered South Korean cars with an engine capacity of less than 3 liters will be immediately removed as the free trade pact comes into force.
Australia is South Korea's fourth-largest car export market, following the United States, Saudi Arabia and Russia. Cars take up around 20 percent of South Korea's total exports to Australia.
Australia will abolish a 5 percent tariff on auto parts made by South Korean companies in three years, with import duties on tires to be eliminated immediately.
Import tariffs on TVs, refrigerators, washing machine and heavy construction equipment will be mostly removed immediately, while those on most steel and petrochemical products to be abolished immediately.
In return for that, South Korea will abolish a 40 percent import duty on Australian beef in 15 years after the FTA takes effect.
In the South Korean import beef market, Australia held a 55.6 percent market share in 2013, trailed by the United States with a 34.7 percent share and New Zealand with 8.8 percent.
A 25 percent import duty on Australian port will be eliminated within five years, while import tariffs on barley and corn will be removed within 15 years and 7 years respectively.
Seoul's trade ministry said Australia will benefit from the FTA in exports of beef and dairy products, but it noted that South Korea adopted safeguard in beef imports and seasonal duties in some fruits while excluding rice from the liberalization item.