South Korea and the United Kingdom have agreed in principle on a bilateral free trade agreement in view of the possibility of a no-deal Brexit in late October this year.
South Korean Trade Minister Yoo Myung-hee and U.K. International Trade Secretary Liam Fox met with each other in Seoul on June 10 and reached the agreement.
The Ministry of Trade, Industry and Energy of South Korea explained that the agreement is an emergency bridge agreement as Britain is still a member of the European Union and the agreement focuses on maintaining the bilateral trade relations of the two sides at the same level as the FTA between South Korea and the European Union so that the relations can be continuous and stable.
When it comes to commodity tariffs, the two sides agreed to apply the same tariff concession as the eight-year-old South Korea-EU FTA so that zero tariffs can be maintained on all manufactured goods. As for agricultural safeguards covering nine items such as beef, pork, and ginseng, a lower implementation threshold is going to be applied. A tariff-rate quota is going to be introduced with regard to malt and auxiliary feed.
In addition, components the United Kingdom procures from Europe will be regarded as British products for three years. Likewise, transport via the European Union will be deemed as direct transport for three years.
Also, the two sides prepared additional provisions so that the South Korea-U.K. FTA can be turned into an agreement higher in level than the South Korea-EU FTA within two years. In reaching the agreement, the South Korean government assumed three possible scenarios, that is, no-deal Brexit, Brexit deal reached by the United Kingdom and the European Union, and additional deadline extension.
At present, Brexit hardliners are the majority in the Parliament of the United Kingdom. The ratification of the South Korea-U.K. FTA in the parliament must be completed by October 31 if the hardliners push ahead with a no-deal Brexit. Then, the FTA immediately becomes effective on Nov. 1. Otherwise, benefits of the South Korea-EU FTA disappear.