After China, the US and Japan, South Korea is Australia's next largest trading partner. Bilateral trade accounts for around 5% (A$32b) of Australia's international trade. Australian exports of goods and services to South Korea were worth A$20b in 2016, driven largely by shipments of coal, iron ore, beef and aluminium. Australia is also the third biggest supplier of agricultural and food related products to South Korea.
The KAFTA—Australia's bilateral trade agreement with Korea – has lowered tariffs that have already provided benefits to Australian exporters. KAFTA will also lower the cost of Korean products for Australian businesses through the removal of tariffs. An example of a smaller Australian exporter to South Korea is Emtivac Engineering, which exports pumps and compression systems to Hyundai.
Services exports to Korea lag merchandise trade. But the FTA should improve market access for suppliers of legal, accounting and telecommunications services and guarantees open access across a broad range of other services sectors, including financial services and education.
South Korea is currently Australia's ninth largest source of visitor arrivals. The appreciation of the Australian Dollar (AUD) weighed heavily on arrivals between 2010 and 2015, but since 2014 the Korean Won has appreciated 8% against the AUD which could be a significant influence behind the influx in recent years.
South Korea was Australia's third largest source of foreign student enrolments in 2016 (30,600 students) behind China and India.
South Korean direct investment in Australia has grown upwards of 8% each year over the last five years, totalling A$23.5b in 2016. Korean steel maker POSCO's significant stake in the A$6b iron ore mine at Roy Hill in Western Australia is currently South Korea's largest overseas construction project. The trade between Australia and South Korea is also gradually expanding beyond resources, into areas such as tourism, technology, engineering, real estate and infrastructure.
Australian investment in Korea is currently less than 1% of its total foreign investment portfolio.