Today the Department for Business and Trade will launch negotiations for an upgraded free trade agreement (FTA) with the Republic of Korea (RoK), with the first round of negotiations to be held in Seoul in January.
In line with the Government’s commitments to transparency and scrutiny, more information on these negotiations will be published and placed in the Libraries of both Houses. This will include:
The strategic case for an upgraded UK-RoK trade agreement.
Our objectives for the negotiations.
A scoping assessment, providing a preliminary economic assessment of the potential impact of the agreement.
A summary of the responses to the call for input on trade with the RoK, held between December 2022 and February 2023. This took views from consumers, businesses, and other interested stakeholders across the UK on their priorities for upgrading our existing trading relationship with the RoK.
The RoK is an important trading partner in the Indo- Pacific region. Our trade relationship with the RoK has grown substantially since 2011, from £7.4 billion to £18.3 billion in 2022. The RoK is now the 13th largest economy in the world and the UK’s 21st largest trading partner. The RoK’s import market is expected to grow by 45% by 2035, to and have around 45 million middle-class consumers. This projected growth has the potential to drive further demand for world-class UK goods and services. This, therefore, is an opportune moment to ensure our trade agreement with the RoK is best tailored to the needs of the UK and delivering for our economy.
Our existing agreement came into effect in 2021 and enabled trade continuity between the UK and the RoK following the UK’s withdrawal from the EU. It replicates the provisions outlined in the 2011 EU-RoK FTA. Our current agreement is one of the deepest FTAs that the RoK has signed to date and provides a strong platform for UK companies to access the RoK market. As part of securing and future proofing our trading relationship with the RoK, there are opportunities to maximise the number of UK businesses benefiting from this platform.
These negotiations provide an opportunity to secure simpler rules of origin which reflect UK industry requirements. Rules that consider existing and future supply chains, and are supported by predictable administrative arrangements, will help support the number of UK businesses accessing preferential tariffs.
In 2021, around 6,700 UK businesses exported goods to the RoK, of which 85% were small and medium enterprises (SMEs). An updated FTA could also further support SME trade with the RoK by streamlining existing complex arrangements, simplifying and digitalising customs procedures, and ensuring SMEs can access the wider benefits of a new FTA.
Since the current UK-RoK FTA was negotiated, trade policy has advanced in several areas. Perhaps most importantly, the existing agreement lacks comprehensive digital provisions. Both the UK and the RoK have previously negotiated world-class digital trade commitments with other trading partners, and this is an area of great potential for negotiations. Digital trade is rapidly becoming dominant, with 79% of our services trade with the RoK now delivered digitally. As a global services superpower, seizing opportunities in this area is a key part of further enhancing the UK’s prosperity.
Enhancing the UK-RoK FTA can also support the broader UK-RoK relationship and ensure it continues to thrive in the future, building on the 140 years of diplomatic relations we have enjoyed. Through these negotiations, we can take further steps to bolster our ongoing co-operation in areas such as energy and supply chains to anticipate and mitigate against future economic shocks.
In all of our trade negotiations, we will not compromise on our high environmental protection, animal welfare and food safety standards. Protecting the NHS is a fundamental principle of our trade policy; the NHS, the price it pays for medicines and its services are not on the table.
The Government will continue to keep Parliament updated as negotiations progress, including close engagement with the relevant parliamentary Committees.
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