- UK goods exports to South Korea remain eligible for reduced
or zero tariffs after UK secures extension
- Manufacturing sector expected to benefit, including
automotive and food and drink, keeping British goods competitive
in Korea
- Negotiations for enhanced UK-South Korea trade deal to launch
later this year
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.
Minister for International Trade said:
This is fantastic news for UK businesses who can continue selling
their brilliant goods with confidence to South Korea, a
fast-growing market of the future with a high demand for quality
British products.
It provides welcome certainty as we prepare to kickstart
negotiations on an exciting new trade deal set to turbocharge our
already thriving £18 billion trading relationship and boost
British exports.
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.
Society of Motor Manufacturers and Traders Chief
Executive Mike Hawes said:
We welcome this announcement as it avoids the re-imposition of
duties from January 2024. In the first half of the year, South
Korea was our seventh biggest car export market and the third
biggest supplier of new passenger cars for UK buyers – so duty
liabilities would have been bad for both sides.
We look forward to the start of negotiations and swift conclusion
of a modernised trade deal that delivers more benefits to our
respective automotive sectors, in particular boosting trade in
EVs and related technologies.
Food and Drink Federation Director of Sustainability and
Growth Balwinder Dhoot said:
This is welcome news for food and drink manufacturers and gives
continued certainty to exporters until a new and ambitious
agreement is negotiated. This 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.
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.
