Kafta Juice Flyer - Austrade, Australian Government
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The Korea-Australia Free Trade Agreement (KAFTA) came into force in December 2014, bringing significant benefits for Australian exporters. When KAFTA is fully implemented, tariffs on 99.7 per cent of exports to Korea will be eliminated. The agreement helps level the playing field for food exporters competing with companies from the US, EU, Chile and the Association of Southeast Asian Nations, which all benefit from existing trade deals with Korea. Under KAFTA, the tariff on orange juice will reduce from 21.6 per cent currently to 10.8 per cent on 1 January 2017, and will be eliminated by 1 January 2018. The tariff on grape juice will reduce from 18 per cent to 9 per cent on 1 January 2017, and will be eliminated by 1 January 2018. The apple juice tariff will reduce from 31.5 per cent currently to 27 per cent on 1 January 2017, then by 4.5 per cent annually until it is eliminated by 1 January 2023. The tariff on mixed fruit juices will reduce from 35 per cent currently to 30 per cent on 1 January 2017, dropping by 5 per cent annually until it is eliminated by 1 January 2023. The tariff on mixed vegetable juices will reduce from 17.1 per cent currently to 12.8 on 1 January 2017, and reducing by 4.3 percentage points annually until its elimination on 1 January 2020 (for HS codes within 2009 Fruit juices and vegetable juices). These tariff cuts help improve Australia’s competitiveness and make it an ideal time for exporters to enter Korea. Korean consumers have an appetite for imported premium products, and Australian companies offering high-quality juice products with distinctive packaging and branding will find a growing market for their goods. This document provides an overview of the juice market in Korea to help Australian companies plan their export strategy. Exporters are encouraged to undertake their own market research and refer to the Free Trade Agreement Portal (ftaportal.dfat.gov.au) developed by the Department of Foreign Affairs and Trade (DFAT) for more information on tariff cuts. Austrade can also provide insights and assistance to support successful market entry. JUICE TO KOREA KAFTA BENEFITS FOR JUICE KOREA- AUSTRALIA FREE TRADE AGREEMENT ‘Korea has many large café chains and other franchise chains, unlike Australia which has many successful independent standalone cafes. This represents an opportunity for high-end premium juice drinks in attractive glass bottles.’ – Industry expert, Korea
Transcript of Kafta Juice Flyer - Austrade, Australian Government
The Korea-Australia Free Trade Agreement (KAFTA) came into force in December 2014, bringing significant benefits for Australian exporters. When KAFTA is fully implemented, tariffs on 99.7 per cent of exports to Korea will be eliminated. The agreement helps level the playing field for food exporters competing with companies from the US, EU, Chile and the Association of Southeast Asian Nations, which all benefit from existing trade deals with Korea.
Under KAFTA, the tariff on orange juice will reduce from 21.6 per cent currently to 10.8 per cent on 1 January 2017, and will be eliminated by 1 January 2018. The tariff on grape juice will reduce from 18 per cent to 9 per cent on 1 January 2017, and will be eliminated by 1 January 2018. The apple juice tariff will reduce from 31.5 per cent
currently to 27 per cent on 1 January 2017, then by 4.5 per cent annually until it is eliminated by 1 January 2023. The tariff on mixed fruit juices will reduce from 35 per cent currently to 30 per cent on 1 January 2017, dropping by 5 per cent annually until it is eliminated by 1 January 2023. The tariff on mixed vegetable juices will reduce from 17.1 per cent currently to 12.8 on 1 January 2017, and reducing by 4.3 percentage points annually until its elimination on 1 January 2020 (for HS codes within 2009 Fruit juices and vegetable juices).
These tariff cuts help improve Australia’s competitiveness and make it an ideal time for exporters to enter Korea. Korean consumers have an appetite for imported premium products, and Australian companies offering high-quality juice products with distinctive packaging and branding will find a growing market for their goods.
This document provides an overview of the juice market in Korea to help Australian companies plan their export strategy. Exporters are encouraged to undertake their own market research and refer to the Free Trade Agreement Portal (ftaportal.dfat.gov.au) developed by the Department of Foreign Affairs and Trade (DFAT) for more information on tariff cuts. Austrade can also provide insights and assistance to support successful market entry.
JUICE TO KOREA KAFTA BENEFITS FOR JUICE
KOREA-AUSTRALIAFREE TRADE AGREEMENT
‘Korea has many large café chains and other franchise chains, unlike Australia which has many successful independent standalone cafes. This represents an opportunity for high-end premium juice drinks in attractive glass bottles.’ – Industry expert, Korea
MARKET SNAPSHOT Korea imports more than 70 per cent of its food and agriculture products.1 The market for imported packaged food is rapidly growing and diversifying. Consumer tastes are changing and demand for luxury and high-quality food products is increasing.
In 2015, the total market value for the juice drink market in Korea was US$822.6 million.2 While the vast majority of sales are in the lower cost juice drink or juice mix options, premium 100 per cent juice not from concentrate has gained popularity in recent years. This is a niche category, but presents the greatest opportunity for Australian products. Orange is the most popular flavour (54.8 per cent) followed by grape (34.3 per cent) and significantly smaller volumes of tomato (2.8 per cent) and apple (2.7 per cent).3
Juice is dominated by North American international brands, with local leading Korean beverage companies operating as distributors and brand owners. Lotte Chilsung leads local market share at 29 per cent, with strong brand awareness of Del Monte (US), followed by LG Household & Health Care’s Sunkist (US) and Coca-Cola Korea’s Minute Maid (US). Local brands include Seoul Dairy Cooperative’s Achimae Juice, while leading brands in the 100 per cent juice not from concentrate include I’m Real (Pulmuone), Florida’s Natural (Maeil Dairies), and the Grape Nature juice series (Woongjin). Binggrae has also performed well with its T’aom brand, while Welch’s grape juice (Nongshin) has a long-held reputation for quality. The majority of Korea’s imported juice comes from the US followed by Chile, with 2015 imports totalling US$153 million.4
‘Because fresh juice has such a short shelf life you may want to work closely with a local company with expertise in juice distribution. They should also be able to help develop a local brand and packaging using their own artwork, branding and marketing. A lot of juice used to come from Brazil but in recent years there is a lot more North American juice.’ – Industry expert, Korea
‘Some drinks use local Korean cartoon characters to appeal to children. For example, Erom is not a well-known brand but it has adopted the Larva cartoon popular with children, featuring two larvae as main characters. Pororo by Paldo uses the famous little penguin in blue overalls and aviator goggles and his group of animal friends to attract children. Children’s juices like these advertise that they don’t have anything artificial added.’ – Industry expert, Korea
JUICE HS CODES AND TARIFF RATES FROM DECEMBER 2014 The following table provides an overview of the tariff reductions under KAFTA for select juice HS codes. Refer to the DFAT Free Trade Agreement portal for more detailed information.
BaseRate
545454
3030
505054
505054
505030
4545
4545
50
50505030
505050503050
StagingCategory
555
710
5510
10510
5105
55
107
10
10101010
10101010710
Year 1 12/12/14
43.2 43.2 43.2
25.7 27.0
40.0 40.0 48.6
45.0 40.0 48.6
40.0 45.0 24.0
36.0 36.0
40.5 38.5
45.0
45.0 45.0 45.0 27.0
45.0 45.0 45.0 45.0 25.7 45.0
Year 2 1/1/15
32.4 32.4 32.4
21.4 24.0
30.0 30.0 43.2
40.0 30.0 43.2
30.0 40.0 18.0
27.0 27.0
36.0 32.1
40.0
40.0 40.0 40.0 24.0
40.0 40.0 40.0 40.0 21.4 40.0
Year 3 1/1/16
21.6 21.6 21.6
17.1 21.0
20.0 20.0 37.8
35.0 20.0 37.8
20.0 35.0 12.0
18.0 18.0
31.5 25.7
35.0
35.0 35.0 35.0 21.0
35.0 35.0 35.0 35.0 17.1
35.0
Year 4 1/1/17
10.8 10.8 10.8
12.8 18.0
10.0 10.0 32.4
30.0 10.0 32.4
10.0 30.0 6.0
9.0 9.0
27.0 19.2
30.0
30.0 30.0 30.0 18.0
30.0 30.0 30.0 30.0 12.8 30.0
Year 5 1/1/18
0.0 0.0 0.0
8.5 15.0
0.0 0.0 27.0
25.0 0.0 27.0
0.0 25.0 0.0
0.0 0.0
22.5 12.8
25.0
25.0 25.0 25.0 15.0
25.0 25.0 25.0 25.0 8.5 25.0
Year 6 1/1/19
0.0 0.0 0.0
4.2 12.0
0.0 0.0 21.6
20.0 0.0 21.6
0.0 20.0 0.0
0.0 0.0
18.0 6.4
20.0
20.0 20.0 20.0 12.0
20.0 20.0 20.0 20.0 4.2 20.0
Year 7 1/1/20
0.0 0.0 0.0
0.0 9.0
0.0 0.0 16.2
15.0 0.0 16.2
0.0 15.0 0.0
0.0 0.0
13.5 0.0
15.0
15.0 15.0 15.0 9.0
15.0 15.0 15.0 15.0 0.0 15.0
Year 8 1/1/21
0.0 0.0 0.0
0.0 6.0
0.0 0.0 10.8
10.0 0.0 10.8
0.0 10.0 0.0
0.0 0.0
9.0 0.0
10.0
10.0 10.0 10.0 6.0
10.0 10.0 10.0 10.0 0.0 10.0
Year 9 12/12/22
0.0 0.0 0.0
0.0 3.0
0.0 0.0 5.4
5.0 0.0 5.4
0.0 5.0 0.0
0.0 0.0
4.5 0.0
5.0
5.0 5.0 5.0 3.0
5.0 5.0 5.0 5.0 0.0 5.0
Year 10 1/1/23
0.0 0.0 0.0
0.0 0.0
0.0 0.0 0.0
0.0 0.0 0.0
0.0 0.0 0.0
0.0 0.0
0.0 0.0
0.0
0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0
Description
Fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matterOrange juiceFrozenNot frozen, of a Brix value not exceeding 20OtherGrapefruit (including pomelo) juiceOf a Brix value not exceeding 20OtherJuice of any other single citrus fruitOf a Brix value not exceeding 20Lemon juiceLime juiceOtherOtherLemon juiceLime juiceOtherPineapple juiceOf a Brix value not exceeding 20OtherTomato juiceGrape juice (including grape must)Of a Brix value not exceeding 30OtherApple juiceOf a Brix value not exceeding 20OtherJuice of any other single fruit or vegetableCranberries (Vaccinium macrocarpon, Vaccinium oxycoccos, Vaccinium vitis-idaea) juiceOtherJuice of fruit other than cranberries (Vaccinium macrocarpon, Vaccinium oxycoccos, Vaccinium vitis-idaea) Peach juiceStrawberry juiceOtherJuice of vegetableMixtures of juicesOf fruitChiefly on the basic of orange juiceChiefly on the basic of apple juiceChiefly on the basic of grape juiceOtherOf vegetablesOther
HS code (HS2012)
02009
200912009110000200912000020091900002009220092100002009290000200932009312009311000200931200020093190002009392009391000200939200020093990002009420094100002009490000200950000020096200961000020096900002009720097100002009790000200982009810000
20098920098910
200989101020098910202009891090200989200020099020099010200990101020099010202009901030200990109020099020002009909000
Tariff rate (%)
Separate to KAFTA, each party is able to unilaterally reduce its MFN-applied tariff at any time. For example, countries might temporarily reduce a tariff for a commodity that is in short supply. Traders will need to assess whether it is more advantageous to import under the preferential tariff under the Agreement or the current MFN-applied tariff.
AUSTRADE.GOV.AU
CONTACTHaesook Chung Senior Business Development Manager Seoul, South Korea Austrade
Monica Lee Business Development Manager Seoul, South Korea Austrade
Preferential KAFTA tariffs are not applied automatically in Korea, follow the four steps below to take advantage of KAFTA.
› 1. Identify the correct HS codes for your product with the Korea Customs Service and your importer or freight forwarder.
If necessary get an advance ruling from the Korea Customs Service (customs.go.kr) with the assistance of your importer.
› 2. Visit the DFAT Free Trade Agreement Portal to confirm how your products will be treated under KAFTA in terms of tariff reduction and tariff quota.
› 3. Review the Free Trade Agreement Portal to ensure your products meet the criteria for ‘Australian Origin’. FTA Portal: ftaportal.dfat.gov.au
› 4. Prepare certification of origin for your products.
KAFTA allows Australian exporters to self-certify the origin of their goods by preparing an Origin Certification Document (OCD). Instructions on self-certification are included in DFAT’s Guide to using KAFTA to export and import goods.
You can also certify origin by obtaining a Certificate of Origin (COO) from the Australian Chamber of Commerce and Industry (ACCI) and Australian Industry Group (AIG), the accredited certifiers in Australia.
ACCI: acci.asn.au AIG: aigroup.com.au
HOW TO USE KAFTA TO EXPORT PRODUCTS TO KOREA
In-depth detail of the above four steps are included in DFAT’s Guide to using KAFTA to export and import goods.
Email: [email protected]
Phone: 13 28 78
austrade.gov.au
Sources:1. Yonhap News, 8 September 2014. 2. Euromonitor Data 2015. 3. Euromonitor International, Juice in Korea, June 2015.4. International Trade Centre, December 2015.
DISCLAIMER: Austrade does not endorse or guarantee the performance or suitability of any introduced party or accept liability for the accuracy or usefulness of any information contained in this document. Please use commercial discretion to assess the suitability of any business introduction or goods and services offered when assessing your business needs. Austrade does not accept liability for any loss associated with the use of any information and any reliance is entirely at the user’s discretion.©Commonwealth of Australia 2016This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth, available through the Australian Trade Commission. Requests and enquiries concerning reproduction and rights should be addressed to the Marketing Manager, Austrade, GPO Box 5301, Sydney NSW 2001 or by email to [email protected].
March 2016
