The UK has signed an outline free trade agreement which aims to maintain an existing trade arrangement post Brexit. The International Trade Secretary, Liam Fox, has signed this deal in Seoul, with the South Korean contemporary, Yoo Myung-hee.
This preliminary agreement is the first post-Brexit deal secured in the Asian subcontinent. It is in line with the existing free trade agreement between Korea and the EU. The chief investment officer at Kleinwort Hambros, Mouhammed Choukeir, spoke to BBC 5 on Wake Up to Money, and said that the deal marks a landmark moment. He said that the largest trade bloc of the EU and US are yet to be negotiated.
This deal covers exports from SK such as cars and parts, and ships, while imports from Britain cover crude oil, whisky and cars. It is a deal to provide stability as Britain is set to leave the EU by 31st of October, irrespective of whether there is a deal or not. Trade free of tariff is important to the UK as exports to Seoul have seen an increase since the EU deal in 2011l. 2018 itself saw sale of goods worth 6 billion Euros to South Korea, while imports worth 4 billion Euros were made. South Korea is among the biggest countries in Asia that Britain has made an FTA with. The largest in terms of UK exports remains to be Switzerland, with Japan and Canada not agreeing to large scale trade agreements. These are smaller countries than the EU 27.
Mr. Fox mentioned that the value of trade between UK and Korea have doubled since 2011. In his opinion continuity in business with Korea without additional barriers will increase trade prospects in the future. As global economic scenarios change, a strong relationship with Korea will promote economic growth in both nations.
Trade Dispute
Both nations will ratify the deal by the end of October and implement it by November. Ms. Yoo of Korea mentioned that the deal eases uncertainties which Brexit had sparked while the market environment remained challenging owing to an escalating trade dispute between US and China.
South Korea is Asia’s fourth largest economy and leads global markets in electronics, steel and auto part production. UK is their second largest trading partner among EU countries, while Korea is the 18th largest for UK.
Deal Negotiation
The UK plans to push striking arrangements with trading partners as Brexit becomes a reality. As part of the EU, UK is part of 40 trade deals which EU governs. If UK leaves EU with no deal, these trade deals will exclude it immediately. This will cause 11% of UK trade to become inexistent. Therefore, a priority for UK has been to form continuity deals with 12 other countries and regions such as Israel, Norway, Chile, Iceland and Switzerland.
