Australia Korea Business Council
36th Joint Meeting
Andrew Bragg
Director of Policy & Global Markets
Financial Services Council
2 October 2015
From the sheep’s back…
• Early 1900s:
•Economy - Agricultural production 61%, manufacturing 21% and mining 18%
•Wheat and wool made up more than 2/3 of Australia’s exports
•In 1901, 14% of Australians were employed in agriculture
•Australia’s largest trading partners were the UK and USA
•The Australian Wheat Board
•In 1915 the Commonwealth Government set up a wheat pooling scheme to assist wheat
growers and to ensure appropriate management of this vital foodstuff during World War I. It
was administered by an Australian Wheat Board. The first AWB ceased operations in 1921.
•The second Australian Wheat Board was established in the 1930s as a government agency to
regulate the wheat market following the Great Depression. It held a monopoly on wheat
exporting for the next 60 years.
•Australian Wool Bodies:
•State and regional based associations of auction buyers date back to the 1890s, with the first
national representative body established in 1946.
•The national body took the name of Australian Council of Wool Exporters in 1986.
To the services economy
• 2015:
•70% of GDP in services
•80% of Australian jobs
•Just 17% of exports are in services – which include for example:
•Tourism
•Education
•Business services including accounting and legal services
•Transport
•Financial services
•1.5% of total exports are in financial services
Tariffs? What are tariffs?
•Source: CFMEU Twitter handle
KAFTA and financial services
Commitment
KAFTA
Non discrimination
against Australian
providers
Yes. Accord foreign investment by financial institutions and investors, and some
insurance and banking services, equal treatment to domestic investment and services.
MFN. More favourable treatment subsequently given to a non-party, must be accorded
to financial investment and services between parties of the FTA.
Market access
(investment)
Yes. General prohibition on controls that limit access to the market by foreign financial
institutions and investors (restrictions on the number, type or value of services and
investment).
Rights for offices and affiliates to perform certain functions in the foreign market (eg:
data processing)
Market access (trade in Yes. Certain insurance and banking services can be provided without the need to
services)
establish a commercial presence in the foreign market.
Portfolio management services and investment advice for investment funds can be
provided in the other party, subject to some limitations.
An FTA is just the end of the beginning
• Implementation or bust!
• Tariffs and bounties are not the primary barrier to services access
• Market access for services relies on regulatory access, abolition of beyond the boarder barriers and
cultural change
• Implementation is therefore based on intangible legal arrangements
• In financial services under KAFTA, this will involve the Korean and Australian securities regulators
agreeing or creating:
•A framework for mutual recognition
•Issuing class order relief
•Creating a regulatory guide for financial services licensees
Next steps in implementing KAFTA
• Services implementation must be on the agenda for KAFTA financial services committee meetings
• ASIC and its Korean counterpart must be engaged in this process
• New ideas to improve services implementation:
•There should be periodic reporting to Parliament on implementation to maximise accountability
on the government and DFAT
•This reporting could be questioned as part of Senate Estimates processes
•ASIC could also publish details of FTA implementation of FTA implementation commitments in its
annual report
THANK YOU
abragg@fsc.org.au