Britain and South Korea have agreed to extend a period of low or zero tariffs on bilateral trade by two years, ahead of talks to forge a new trade deal. This agreement will cover a range of products from automotive parts to tableware, with the UK hoping to help the country’s manufacturing sector.
The government’s chief negotiator on the deal, David Davis, said it “demonstrates our determination to secure a good trading relationship with Korea after Brexit.” “It will also boost the reputation of British brands like Denby Pottery, which has become a favorite for young generations in Korea who love to set their tables with beautifully crafted Made in England tableware,” the official statement added.
Trade between the countries is worth more than £14.6 billion annually, and the new agreement will protect that level of trade after Britain leaves the European Union on Oct. 31. The two countries have been using a continuity free-trade agreement rolled over from the EU. This new deal will replace it until 2026.
Several sectors have been calling for an extension to the current trade deal. One of those is the car industry, which fears high tariffs set to effect on Jan. 1 would stifle sales of electric vehicles (EVs). The ACEA auto manufacturers’ lobbying group has warned that the requirement to source 40% of the components of cars sold in the EU from within Europe, under so-called rules of origin, will make it difficult for companies to meet this target by 2020.
British businesses, such as carmakers and food and drink companies, also want a more flexible approach to rules of origin so that they can be altered to suit the needs of individual markets. This includes changing how countries calculate the percentage of a product’s materials that must be sourced locally to qualify for duty-free status, which can significantly impact price.
However, the government is also trying to cut tariffs with other markets and has been working to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The US, Canada, Japan, Mexico, Australia, and New Zealand are members of the CPTPP formed in 2018. In a further sign of the UK’s growing ambition for global trade, the British Ambassador to India, Simon Burns, recently met with Indian officials in Delhi, and there are plans for a new UK-India free-trade agreement. The UK has a trade deficit of around £15bn a year with India. This is partly due to tariffs and non-tariff barriers, such as differences in sanitary and phytosanitary standards, quantitative restrictions, and safeguards. A new trade agreement could address these issues, allowing the UK to exploit its strengths in agriculture and pharmaceuticals. It could also reduce the UK’s dependence on the EU for imports of medicines and pharma. In turn, this might help the NHS. The UK has the third-largest pharmaceutical market in the world after the US and China.
