- Korea-UK finalize upgraded FTA, easing rules of origin for key exports.
- Auto, beauty, and food sectors gain wider tariff exemptions.
- Britain opens high-speed rail and online gaming markets to Korea.
Korea and Britain have finalized an enhanced free trade agreement (FTA) designed to simplify rules of origin for Korean cars and consumer products, while also granting access to Britain’s high-speed rail and online gaming sectors, according to Seoul’s trade ministry.
The agreement was co-signed by Korean Trade Minister Yeo Han-koo and British Minister Chris Bryant during their meeting in London, after two years of negotiations between the nations.
The initial FTA between Seoul and London was signed in 2019 and put into effect in 2021. According to the Ministry of Trade, Industry and Resources, under the updated agreement, Britain chose to relax rules of origin for automotive, beauty, and food items exported from Korea.
At present, Korean automakers can only receive tariff exemption if they demonstrate that at least 55 percent of a vehicle's value, comprising parts and materials, was produced within Korea. The updated agreement will reduce the threshold for tariff exemption to 25 percent, simplifying the process for automakers to obtain preferential status.
According to the ministry, automobiles represent a major export for Korea to Britain, making up 36 percent of Korea's overall exports to that European country last year. Korean beauty items facing 8 percent tariffs can receive duty exemptions if manufacturing processes such as chemical reactions, purification, blending, and mixing occur in the country of export.
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Korean processed food items such as dumplings, "tteokbokki," "gimbap," and kimchi will be given preferential treatment even if they are produced domestically with key ingredients obtained from other countries. At present, they can only encounter zero tariffs if essential components come from Korea.
In the public procurement sector, the UK has consented to liberalize its high-speed rail market. Up until now, Korea was the sole party to provide access to this market. In the service industry, the European country is committed to further liberalizing its online gaming market, where Korean firms exhibit global competitiveness, along with markets tied to emerging technologies such as artificial intelligence.