Korea, Britain sign post-Brexit free trade pactKorea signed a free trade agreement (FTA) with the United Kingdom in advance of its planned exit from the European Union (EU).
The Ministry of Trade, Industry and Energy announced that the two countries signed a finalized FTA in London on Thursday that will replace the free trade conditions currently in place through an FTA between Korea and the EU.
The U.K. is expected to depart from the European bloc by Oct. 31, following a public referendum on “Brexit” in June 2016. Korea and the U.K. have negotiated over the past three years on trade relations and signed the FTA in principle in June.
The agreement largely follows the existing Korea-EU FTA that went into effect in July 2011 and maintains tariff exemptions on all manufactured goods, including major export items to the U.K. such as cars and auto parts. Without a free trade deal, Korean cars would have faced 10 percent tariffs, and auto parts tariffs of 3.8 to 4.5 percent.
The U.K. is Korea’s 17th largest export destination, and its second largest trade partner in the EU after Germany. Outbound shipments to the U.K. last year totaled $6.4 billion and cars, the top export category, accounted for 23.1 percent of total exports.
Korea is also a sizeable market for the United Kingdom, being its 15th largest export destination. Top U.K. imports include crude oil, medical supplies, cars and whiskey.
The government has agreed to consider products assembled in the U.K. but originally sourced in the EU as U.K. goods for three years. U.K. products that are exported through the EU will also be considered as direct exports for three years.
Unlike most FTAs that take a long period for legislative approval, the FTA with the U.K. is expected to be approved before an Oct. 31 deadline as the agreement needs to go into effect to avoid trade disruption.
The Trade Ministry explained that it has prepared the FTA so that free trade relations with the U.K. will continue even if it leaves the EU without an agreement. The two governments agreed to make improvements to the FTA within two years.
The signing of the FTA with the U.K. came just a day after Korea signed a free trade deal with Israel.
Amid increasing weakness in the global economy, the government has focused on signing new FTAs. It is trying to finalize deals with Malaysia, Indonesia and the Philippines by the end of this year.
Korea has some kind of free trade agreement with 52 countries after first establishing free trade with Chile in 2004.
BY CHAE YUN-HWAN [email@example.com]