The United Kingdom has successfully secured a two-year extension to rules that allow their companies to sell their products in South Korea at a reduced or zero tariff. The extension was secured under the UK and South Korea Free Trade Agreement (FTA) which facilitated British businessmen to have access to South Korean markets without having to pay a high tariff usually imposed by the latter. This grant of extension is soon to be followed by a new set of negotiations between the two countries regarding new and modernized trade deals that would cover sectors like digital in addition to the existing ones.
UK-Korea Bilateral Trade Relationship
South Korea is ranked 13th among the major economies in the world. Its import market is predicted to grow by 45% by 2035. Ever since the original FTA was negotiated, the UK’s trade with it has more than doubled. The UK exported around £7.3 billion to South Korea last year, with goods making up most of it. Several manufacturing companies are expected to benefit from the extension. Among them are food and drinks and automotive. According to the previous FTA, the expiration of the period of bilateral trade was scheduled to be on January 1, 2024. However, under the current negotiation, the extension is granted until 2025 and also allows for a further extension if needed.
Automobile Industry:
South Korea is the third-largest supplier of new cars to Britain and the second-largest British export to South Korea. Therefore, calculating duty liabilities would have been difficult for both countries. According to British Society of Motor Manufacturers and Traders Chief Executive Mike Hawes, “we look forward to the start of negotiations and swift conclusion of a modernized trade deal that delivers more benefits to our respective automotive sectors, in particular boosting trade in EVs and related technologies”. He was pointing at the new, more permanent set of trade agreements that are on the horizon that would help both countries further their bilateral trade relationship.
Food and Drinks
The British Food and Drink Federation Director of Sustainability and Growth, Balwinder Dhoot, agreed to the above and said the extended period “will help businesses to export more products and ensures continued flexibility to use seasonal imported ingredients that complement our industry’s use of domestic produce”.
Conclusion
The South Korean market is a fast-growing one with increasing demand for high-quality British goods. The original trade agreement between the UK and South Korea was one that was rolled over from Britain’s membership in the European Union. At the time, the strict time limit was set in keeping with the EU-South Korea rules of origin and on shipping goods via the EU. This two-year period not only provides certainty for the development of the current agreement but also promises to include new sectors, better suited for both countries, under its aegis, like digital and small businesses, that would help in job creation and the upgrading of their bilateral relationship.
