Australian Prime Minister Tony Abbott pulled off an impressive feat in Asia last week as he embarked on a tour of Japan, South Korea and China, forging free trade agreements and announcing closer security relations on each stop along the way.
The conservative Abbott government came to power in 2013 declaring that Australia was “open for business” and promising to fast-track stalled free trade agreements with East Asia’s three economic powerhouses. Accompanied by an unprecedented delegation of more than 600 high-level Australian businesspeople and the premiers of six Australian states as well as the chief minister of the Northern Territories, Abbott last week signed the Korean Australia Free Trade Agreement (KAFTA), announced the Japan-Australia Economic Partnership Agreement (JAEPA) and reiterated in China that he and Chinese Premier Li Keqiang were determined to sign a China-Australia Free Trade Agreement before the end of 2014.* These countries represent the major firepower of Australian trade: China is Australia’s No. 1 trading partner, Japan second and South Korea fourth.
The Japan-Australia negotiations had been dragging on for seven years, with the reduction of Australian beef and dairy tariffs key sticking points. As it now stands, the JAEPA has cut tariffs on 97 percent of Australian exports to Japan, with benefits to the Australian beef industry expected to be worth $5.5 billion over 20 years. In return, Australia has cut tariffs on Japanese electronic items, vehicles and white goods such as home appliances. Japan and South Korea will also benefit from relaxed Australian Foreign Investment Review Board oversight, with the dollar amount triggering automatic review on private company investments, excluding agriculture, raised from $233 million to just more than $1 billion. Previously only New Zealand and the United States enjoyed these investment privileges.