South Korea and Britain have agreed in principle to maintain their current free trade agreement ahead of Britain’s exit from the European Union (EU). The preliminary deal includes keeping zero-tariffs on South Korean exports including auto parts and ships even after the Brexit.
The two countries have agreed to maintain the level of trade terms in line with the current South Korea-EU Free Trade Agreement for the next three years. This means that for the three years following the Brexit, British products made of materials produced in Europe will be acknowledged as being made in Britain, while South Korean companies will still be able to benefit from the FTA when they export items through distribution bases in Europe.
In 2018, South Korean exports to Britain was about 6.4 billion U.S. dollars, accounting for about 1.1 percent of the country’s total exports (605.4 billion dollars). Britain may not be one of the largest trading partners for South Korea, but it still holds importance as it is the destination for the country’s key exports such as automobiles, ships, and auto parts. As of last year, South Korea exported 1.47 billion dollars’ worth of vehicles to Britain, the largest among all export products, followed by ships (1.07 billion dollars), offshore structures (524 million dollars), aircraft parts (380 million dollars), and auto parts (261 million dollars).
The latest deal came amid growing concerns over a “no-deal” Brexit, which refers to a scenario where Britain leaves the EU without agreeing on post-Brexit conditions. Shin Ji-hyun, head of the FTA Implementation Division at the South Korean Ministry of Trade, Industry and Energy, said that the ministry has signed a free trade agreement with Britain to avoid possible disruptions to the existing zero tariff benefits. She added that the ministry will officially sign the deal next month, and make efforts to ratify the pact before the end of October, which is the current Brexit deadline.
Choong-Hyun Song firstname.lastname@example.org