S. Korea and UK’s trade officials formally sign free trade agreement

Continuity agreement ensures that all manufactured goods remain tariff-free, as specified in the South Korea-EU FTA, even under a no-deal Brexit.

South Korea and the UK have completed their negotiations for a free trade agreement that’s expected to keep trade flowing between the countries without any barriers even if the UK crashes out of the European Union without any special arrangements, a scenario known as “no-deal Brexit.”

South Korea’s Ministry of Trade, Industry, and Energy announced on Aug. 22 that UK International Trade Secretary Liz Truss and South Korean Trade Minister Yoo Myung-hee had officially signed a free trade agreement, or FTA, between the two countries.

Following a provisional declaration that a free trade deal had been reached on June 10, the two countries reviewed the text of the document and related domestic issues. The signing on Thursday marks the end of negotiations, and the South Korean government plans to bring the agreement up for ratification in the National Assembly before Brexit.

The FTA reached by South Korea and UK replicates the content of the South Korea-EU FTA, which took effect in July 2011. South Korea’s manufactured goods will continue to be exported to the UK completely tariff-free even after Brexit, just as at present.

The requirements for activating agricultural safeguards on nine categories of products, including beef, pork, apples, and sugar, were relaxed somewhat relative to the South Korea-EU FTA. Tariff-rate quotas will also be provided for malt, malting barley, and feed supplements, all products for which domestic production is inadequate to meet demand in South Korea.

The two countries agreed to abide by the South Korea-EU FTA’s country of origin definitions for three years. That means the UK will treat products made of European ingredients as originating from the UK for three years after Brexit.

South Korean companies that are exporting products to the UK through logistic bases in Europe will be allowed to enjoy the benefits of the two countries’ FTA. A clause was also included in the agreement to permit adjustments in two years, assuming that the UK actually leaves the EU.

Last year, South Korea’s exports to the UK amounted to about US$6.4 billion, or 1.1% of total exports. Though that’s not a huge amount, the major export products represent South Korea’s leading industries, including automobiles (US$1.46 billion), ships (US$1.07 billion), and automobile parts (US$26.1 billion), requiring measures to prevent a gap in the trade arrangement.

“We will take measures to ensure that South Korean companies can emerge from uncertainty and instability continue to engage in trade and investment activities,” Yoo Myung-hee said.

A copy of the document signed by the trade officials and the correspondence they exchanged will be published on the FTA website managed by South Korea’s Ministry of Trade, Industry, and Energy (fta.go.kr).

By Choi, Ha-yan, staff reporter

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