With the newly-minted Korea-Australia Free Trade Agreement (KAFTA) to come into effect later this year, Australian firms will be able to establish and operate offices in South Korea for the very first time.
Lewis McDonald, who opened a Korean base in Seoul for the international firm Herbert Smith Freehills
in 2013, has told Australasian Lawyer
that, although some Australian firms will look to open dedicated offices in South Korea, most will prefer to stick to the cheaper fly-in, fly-out option. Law firms have traditionally serviced their South Korean business from bases in financial hub Hong Kong, as well as the even closer Japan market.
He explained that being stationed on the ground in Seoul simply allows him to be closer to his clients and is not the only ingredient needed for a successful working relationship in the Korean market.
“Korea is a relationship-driven market, so anyone who has invested time with individuals from Korean companies will have an advantage over those who have not, provided they have something valuable to offer in the first place,” McDonald said.
KAFTA is expected to boost trade with Korea, which is Australia's third-largest export market and fourth-largest trading partner. Australian Minister for Trade and Investment, Andrew Robb, has said the agreement will "open all sorts of doors" across the legal, accounting, financial, engineering, telecommunications, education, environmental as well as film and television services industries.
While the benefits of reducing tariffs for Australian agricultural exports are being touted as key benefits locally, KAFTA also includes provisions to facilitate more direct investment from Korea and create opportunities for Australian investment in Korea.
HSF's McDonald is not expecting a dramatic amount of new work to result for law firms, because he said that Australian investments are already popular with Korean companies looking abroad.
“In my work I focus on energy and natural resources investment and the KAFTA enhances the already very good economic conditions for these investments from Korea into Australia,” McDonald said.
However, he suggests the KAFTA agreement will be particularly beneficial to lawyers looking for international opportunities. He singled out Korean nationals who have studied law in Australia, worked in Australian firms and who want to return to Korea to work in an international environment.
“In my view, this group of lawyers and their Australian education providers have the most to benefit from these changes,” he said.
|KAFTA – What you need to know
|Korea is Australia’s third-largest export market and our fourth-largest trading partner.
- In 2012, Australian exports to Korea were valued at $21.6 billion, accounting for 7% of all Australian exports.
- Australia imported $10.3 billion of good and services from Korea
- The FTA will be worth over $5 billion in additional income to Australian between 2015 and 2030. Exports are expected to be 25% higher.
|Which sectors will benefit the most?
- Australian food and agricultural exports are expected to be the biggest winners. Tariffs of up to 300% will be eliminated on beef, wheat, sugar, dairy, wine, horticulture and seafood. Australia is already the largest supplier of beef to Korea.
- Australian sectors that will be exposed to more competition as a result of the FTA and competition from Korean imports include motor vehicles, automotive parts, steel products and textiles and clothing and footwear. Source: DFAT
Fly-in, fly-out Australian law firms can be as successful in the opening South Korean market as those on the ground provided they invest in relationships, claims a Seoul-based specialist.