Korea, UAE finish negotiations on free trade agreement

President Yoon Suk Yeol, left, and UAE President Mohammed bin Zayed Al Nahyan during a luncheon on Jan. 16 after a bilateral summit in Abu Dhabi.[YONHAP]

Korea completed negotiations with the United Arab Emirates (UAE) on a free trade deal following a summit in Abu Dhabi in January.

The pending Korea-UAE Comprehensive Economic Partnership Agreement (CEPA), which will be officially signed within the first half of next year, is Korea’s 24th free trade deal and the first with an Arabic country.

On Saturday, Korea’s Minister for Trade Ahn Duk-geun and his UAE counterpart, Thani bin Ahmed Al Zeyoudi, met in Seoul in a ministerial meeting to sign a joint statement declaring the conclusion of negotiations on terms and conditions of the CEPA.

The UAE is the sixteenth-biggest trading partner for Korea, with the annual trade volume between the two countries standing at $19.5 billion in 2022. The cumulative volume of bilateral foreign direct investments was $7.1 billion.

As of last year, 178 Korean companies were operating in the Middle East country.

After the formal signing of the agreement next year, the CEPA will be put through an economic impact assessment and ratification by the National Assembly before going into effect.

Within up to 10 years of taking effect, the pact will remove tariffs for 92.8 percent of Emirati goods in Korea and 91.2 percent in the UAE. That covers 72.2 percent of imports from the UAE for Korea and 82 percent of imports from Korea for the UAE.

The Korean government expects the country’s key export items to UAE, such as cars, automotive parts and home appliances, will benefit from the tax removal.

Meanwhile, Korea will remove the import duty on crude oil — the UAE’s biggest export items to Korea — within the 10-year period, which will help local refiners enhance profit margins.

In services, which include online gaming, healthcare, content and construction, the Korea-UAE CEPA framework suggests the highest level of market openness for CEPAs ever signed by the UAE so far. Online gaming, in particular, was included under a CEPA for the first time in the UAE, which will help Korean game companies secure a foothold in the country.

Moreover, the two countries agreed to strengthen further economic ties in energy, biotechnology, smart farms, healthcare and advanced industries. This is the first time for the UAE to incorporate the energy and resource industry as an area of cooperation under the CEPA terms.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]