NEW NEGOTIATOR UPDATES ON FTA TALKS

C O N F I D E N T I A L SECTION 01 OF 02 CANBERRA 000571

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STATE PLEASE PASS TO USTR/WEISEL,BISBEE
STATE PLEASE PASS USDA
DEPARTMENT FOR E, EEB, EAP, EAP/EP, EAP/ANP, EAP/K

E.O. 12958: DECL: 06/18/2019
TAGS: ETRD ECON PREL CH KS JP AS
SUBJECT: NEW NEGOTIATOR UPDATES ON FTA TALKS

REF: CANBERRA 470

Classified By: Economic Counselor Edgard Kagan for reasons 1.4 (b/d).


1. (C/NF) SUMMARY: Australia's lead negotiator is optimistic
about the prospects for rapid progress on an FTA with the ROK
following the completion of the first round of discussions in
May. Agriculture will be the biggest sticking point, but
each country's agreement with the United States provides a
good template. ROK President Lee Myung-bak's March visit has
galvanized PM Rudd's interest in an FTA, which could probably
be negotiated in the coming 12 months if political will holds
up on both sides. Japanese officials are following the
Australia-ROK FTA discussions closely and appear concerned
about the longer-term implications of Korea improving its
ability to compete with higher-end Japanese products in
developed economies. Australia's FTA discussions with China
have made little progress, in part because Beijing believes
that Canberra wants a deal for the sake of having a deal.
The Australians recognize that they must work hard to
convince China that a "low-quality" FTA is not politically
viable in Australia. End Summary.

PROGRESS WITH THE REPUBLIC OF KOREA


2. (C/NF) Econcouns and Econ Intern met June 12 with
Ambassador Jan Adams, newly appointed Head of DFAT's China,
Korea and Japan FTA task forces. Adams said that following
ROK President Lee Myung-bak's March visit, PM Kevin Rudd is
focused on trade negotiations with the ROK as a key part of a
broader effort to step up the relationship with Korea. Scott
Dewar, Rudd's Foreign Policy Advisor who covers Asian issues,
told us June 13 that the PM believes that improving relations
with Korea is a major objective for the coming year. Trade
Minister Simon Crean and ROK Trade Minister Kim Jong-hoon
opened the first round of FTA discussions May 18. Following
this first round, GOA lead negotiator Jan Adams remains
optimistic that an agreement could be signed in the next 12
months (reftel) but foresees tough negotiations in
agriculture and automobiles. Beef is a major concern for both
sides but each country,s FTA with the United States could
provide a basis for negotiation. Australia wants dairy access
in ROK and will not negotiate on sanitary and phytosanitary
issues. Adams expects ROK will have high ambitions for auto
negotiations but realizes auto interest groups are strong and
could limit market access in Australia.


3. (U) The ROK is Australia's 6th largest two-way trading
partner and 4th largest export market. Australia exported
A$18.468 billion (US$14.77) to ROK in 2008 mainly in crude
petroleum, coal, iron ore and beef. Australia imported
A$6.439 (US$5.15) billion primarily in passenger motor
vehicles, telecom equipment, refined petroleum and
electronics.
JAPANESE INTEREST


4. (C/NF) Adams said Japan is monitoring the progress of the
Australia-ROK FTA closely. The Japanese seem concerned that
FTAs will give Korean exporters a competitive advantage over
Japanese exporters in Australia and other developed
economies. Japan is Australia's second largest trading
Qeconomies. Japan is Australia's second largest trading
partner. Negotiations for an Australia-Japan FTA started
April 2007, but are stalled; agriculture remains the major,
but not only, sticking point.

PROGRESS WITH CHINA


5. (C/NF) Australia's FTA talks with China have made little
progress since they began in 2005. Adams and other GOA trade
officials believe Beijing is not eager to make concessions on
agriculture and services, since they believe the Australians
want this agreement more than China does. The GOA at all
levels is trying to convince China that a non-comprehensive
agreement is politically unacceptable to Australia. This
week Trade Minister Simon Crean said that Australia was not
prepared to move to the next stage of negotiations until

CANBERRA 00000571 002 OF 002


there is a "new political signal" from Beijing that it is
willing to negotiate.

Bio Note


6. (SBU) Jan Adams was previously the Australian Ambassador
for the Environment (2005-2009) and Head of Trade at the
Australian Embassy in Washington (1999-2004). She was
involved in the negotiation of the Australia-U.S. FTA, which
she says is particularly useful in terms of discussions with
Korea.

Clune