In a positive development, Britain and South Korea have agreed to extend the period of low or zero tariffs on bilateral trade, particularly on products with components originating from the European Union (EU). This extension, confirmed by the British government, is a welcomed boost for various industries, notably the automotive sector.
The extension of this tariff-free trade is vital because, without it, British businesses would have faced substantial tariffs starting from January 1st on exports of products using EU components, as dictated by the rules of origin. This also applied to products shipped via the EU, which could have adversely affected industries such as food and drink manufacturing and automaking, potentially leading to higher prices for goods, including electric cars.
Annually, the trade relationship between Britain and South Korea amounts to an impressive £18 billion ($21.9 billion). The two countries are set to commence discussions later this year to forge a new trade agreement. It's worth noting that the existing agreement was carried over from Britain's EU membership.
Nigel Huddleston, Britain's Minister for International Trade, emphasized the importance of extending the tariff-free period, stating, "This is fantastic news for UK businesses who can continue selling their fantastic goods with confidence to South Korea."
South Korea holds a significant position as the seventh-largest export market for British-made cars and the third-largest supplier of new cars to Britain. The imposition of new tariffs would have had detrimental effects on both sides. Mike Hawes, the head of the British car industry trade body, highlighted the significance of this development, expressing optimism about future negotiations. "We look forward to the start of negotiations and swift conclusion of a modernized trade deal that delivers more benefits to our respective automotive sectors, in particular boosting trade in EVs (Electric Vehicles) and related technologies," said Hawes, the Chief Executive of the Society of Motor Manufacturers and Traders.
The extension of tariff-free trade between Britain and South Korea is a cause for celebration in the international trade community. It underscores the commitment to maintaining and enhancing economic ties, fostering growth, and facilitating cooperation across various sectors.