UK and South Korea Reach New Trade Agreement Extending Tariff-Free Trade
The United Kingdom and South Korea have reached a new trade deal under which 98% of trade will remain tariff-free, matching the terms previously agreed between the EU and South Korea. This agreement extends tariff-free trade on most goods and services and protects approximately £2 billion of UK exports from potential tariff increases.
The UK government stated that the deal is expected to create thousands of jobs in the UK and generate billions of pounds in economic growth. This marks Labour's fourth post-Brexit trade deal, following agreements with the EU, the US, and India. However, the Office for Budget Responsibility (OBR) has assessed that such deals are unlikely to yield a measurable impact on the UK's GDP by 2030.
South Korea ranks as the UK's 25th largest trading partner, accounting for 0.8% of UK trade in the 12 months leading up to June. During this period, UK exports to South Korea fell by 16.4%, while South Korean exports to the UK decreased by 10.8%.
The new deal aims to reduce non-tariff barriers, streamline product-origin rules, and provide protections on digital trade and investment. It highlights the strategic role of the UK and South Korea as gateways for trade: Britain serving as a gateway to Europe for South Korean companies, and South Korea acting as a gateway to Asia for British businesses.
UK industries have welcomed the agreement, including prominent companies such as Bentley Motors, Jaguar Land Rover, and Diageo. The Scotch Whisky Association also noted the significance of the Asia-Pacific region as the largest whisky market by value, underscoring potential benefits for the UK whisky sector.
