The UK and South Korea will formally sign a continuity Free Trade Agreement on Thursday that will allow bilateral trade to continue in the event of a no-deal Brexit on October 31.
In a boost for prime minister Boris Johnson’s no-deal planning, the agreement — which was approved by both states in June — will protect annual trade flows between the countries. They totalled £14.6bn in 2018.
South Korea is among the UK’s top 15 trading partners in terms of British export sales. The bilateral trade accounted for about 1.1 per cent of total British trade, according to UK government statistics. The EU accounts for 48 per cent.
However, the agreement is not a permanent trade deal because it will need to be renegotiated within two years.
The UK will also need to obtain South Korea’s consent to maintain existing tariff-free terms for UK goods with significant European components and for UK components in EU exports.
Moreover, trade experts have noted that, while there is some cause for celebration on the UK side, the government has thus far been unable to replicate this kind of deal with most of its other big trading partners.
“Of Britain’s 24 largest trading partners, there are 16 with which it currently enjoys a preferential trade arrangement,” said David Henig, a former official at the Department for International Trade. “But of those 16, South Korea will be the only one which will be unaffected by a no-deal Brexit.”
Mr Henig noted that Japan, Turkey and Canada were all on the list of 16 nations which have preferential deals with the UK, thanks to Britain’s EU membership. But those three deals have not yet been rolled over.
Mr Henig said Britain had signed continuity agreements with Switzerland and Norway but these covered a reduced amount of trade.
The DIT said that the UK-South Korea FTA replicates, as far as possible, the effects of the EU-South Korea trade deal, allowing businesses to continue to benefit from preferential terms.
In 2017, 6,900 UK businesses exported goods to South Korea, worth around £5.8bn. UK exports mainly consisted of services, cars and fuel.
The DIT said the trade agreement had been welcomed by businesses in industries such as automotive, technology, renewable energy, retail and ceramics. Some of the fastest growing exports to South Korea include cars, which increased to £943m in 2018, up by a third on the year before.
As part of its preparations for Brexit, the UK has thus far signed 13 trade continuity agreements with 38 countries. These include the Southern Africa trade bloc, the Caribbean nations, Iceland, Israel and Norway.
