The UK has secured a two-year extension to rules which help British companies to access lower or zero tariffs when selling goods to South Korea.
The extension has been secured under the UK-South Korea free trade agreement and comes as welcome news for businesses who can continue to avoid the high tariffs imposed by South Korea on products entering the country.
It also comes ahead of the launch of negotiations on a new, modernised trade deal between the UK and South Korea which will cover new sectors like digital, expected before the end of the year.
South Korea is the 13th largest economy in the world and set to grow rapidly. Thanks to a burgeoning middle class, its import market is expected to grow 45% by 2035. The UK’s trade with Korea has more than doubled since the original FTA was negotiated.
Goods make up the majority of UK exports to South Korea, with £7.3 billion worth exported last year. A broad range of British manufacturing sectors are expected to benefit from the extension, including food and drink and automotive, which is the second largest British export to South Korea.
When the UK negotiated the original trade agreement with South Korea, rolled over from our membership of the EU, time-restricted clauses were agreed to allow for the use of EU content in UK products in meeting the EU-South Korea rules of origin and on shipping goods via the EU. Both clauses were set to expire on 1 January 2024.
The extensions will apply for a further two years while the UK and South Korea work on new, permanent rules as part of an enhanced free trade agreement. Today’s agreement allows for both parties to extend this period further, if needed.
Talks for a new trade deal are anticipated to kick off this year. A public consultation was completed earlier this year to identify business priorities for the deal.
The new deal will upgrade our trading agreement with South Korea, ensuring a more modern and fit-for-purpose deal that meets the specific needs of the UK. This is expected to include provisions for digital trade and dedicated help for smaller businesses, which will support economic growth and jobs.