London: South Korea and Britain have signed an enhanced free trade agreement designed to ease rules of origin for Korean automobiles and consumer goods, while also opening Britain's high-speed rail and online gaming markets. This development was announced by Seoul's trade ministry.
According to Yonhap News Agency, the agreement was finalized by Korean Trade Minister Yeo Han-koo and British counterpart Chris Bryant during a meeting in London, concluding two years of negotiations. The original free trade agreement between the two countries was signed in 2019 and came into effect in 2021.
Under the updated agreement, Britain will relax rules of origin for Korean exports such as automobiles, beauty products, and food items. Currently, Korean carmakers must prove that 55 percent of a vehicle's value is generated within Korea to qualify for tariff-free treatment. The new agreement lowers this requirement to 25 percent, simplifying the process for automakers to receive preferential treatment.
Automobiles represent a significant portion of Korea's exports to Britain, making up 36 percent of total exports to the country last year, as reported by the ministry. Korean beauty products, which currently face an 8 percent duty, will also benefit from tariff exemptions if manufacturing procedures occur in the exporting country.
The agreement extends preferential treatment to processed food products like dumplings, "tteokbokki," "gimbap," and kimchi, even if major ingredients are sourced from third countries. Previously, tariff exemptions were only granted when key ingredients originated from Korea.
In government procurement, Britain has agreed to open its high-speed rail market, a sector previously exclusive to Korea. The agreement also promises additional access to Britain's online gaming market and sectors related to emerging technologies, such as artificial intelligence, showcasing Korean companies' global competitiveness.
The ministry highlighted a streamlined visa system in the upgraded FTA to facilitate Korean engineers' entry into Britain, especially for building manufacturing plants. This measure aims to avoid disruptions similar to a recent incident in Georgia, USA, where Korean nationals were arrested in an immigration raid at a car battery plant.
Furthermore, the two nations have agreed to adopt regulations for digital trade, including cross-border data transfers and online consumer protection. An innovation committee will be established to enhance cooperation in AI and advanced technologies, and to bolster supply chain collaboration.
"This agreement will help reinforce the free market order amid growing uncertainties in the global trade environment driven by the spread of protectionism and serve as an opportunity to strengthen economic cooperation with Britain, Korea's major partner in Europe," Yeo stated in a press release, emphasizing the commitment to swiftly implement the remaining procedures for the trade deal.