In good news for the beef industry, it could be put on a more competitive footing against US product in the lucrative Korean market, with talks finally beginning on the negotiation of a free trade agreement between Australia and South Korea.

Prime Minister Rudd and his Korean counterpart, President Lee Myung-bak, agreed to start preparatory talks during the Prime Minister's visit to Seoul in August.

The talks are being hosted by the Korean Ministry of Foreign Affairs and Trade in Seoul from Monday to Wednesday.

"Korea is Australia's sixth largest trading partner, but the full potential of the economic relationship has not been realised," Trade Minister Simon Crean said.

"The Rudd Government is committed to strengthening and broadening our economic engagement with Korea, and the talks this week will be an important part in developing this relationship."

Mr Crean said the preparatory talks were an important step towards ensuring that Australian exporters maximise their opportunities in the Korean market, at a time when Korea's other major trading partners such as the US and the European Union have improved their access through free trade agreements.

Korea is Australia's fourth-largest export market with goods and services exports of $15.3bn in 2007.

It is our sixth-largest trading partner overall, with total two-way trade of $21.8bn in 2007

A non-government study released in April 2008 concluded that a bilateral FTA would facilitate a stronger trade and investment relationship and lead to stronger economic growth to the benefit of both countries.