Ministry of Industry Completes Revision of FTA-Related Laws
Upon Transition Period End, Korea-UK FTA Maintains Preferential Trade Relations Including Tariff Elimination
[Asia Economy Reporter Kim Bo-kyung] The impact of Brexit (the United Kingdom's withdrawal from the European Union (EU)) on our exports is expected to be limited as it approaches in two days. Even if the UK pursues an independent trade policy separate from the EU due to Brexit, there will be no immediate significant changes in the relationship between Korea and the UK.
According to the Ministry of Trade, Industry and Energy on the 29th, even if the UK leaves the EU, the Korea-EU Free Trade Agreement (FTA) can be applied to exports and imports with the UK during the transition period set until the end of this year. The transition period is a temporary allowance for the UK to remain in the EU single market and customs union to minimize confusion caused by Brexit. If the UK and the EU agree to extend the transition period, the Korea-EU FTA will apply until that period.
Once the transition period ends, the Korea-UK FTA will come into effect immediately. The current expected effective date of the Korea-UK FTA is January 1, 2021, but if the transition period is extended, the effective date will be postponed accordingly.
The Korea-UK FTA, officially concluded by both countries in June last year, applies the same concessions as the Korea-EU FTA. This is to maintain a stable business environment with the UK even after Brexit.
Accordingly, the elimination of tariffs on all manufactured goods will be maintained. Major export items such as automobiles and automobile parts can be exported tariff-free as before. Regarding origin, products produced using EU materials will be recognized as originating within the region for three years on a temporary basis. The Ministry of Trade, Industry and Energy has completed domestic legal arrangements, including tariffs, in preparation for Brexit.
Jeon Yoon-jong, FTA Policy Officer at the Ministry of Trade, Industry and Energy, stated, "Since the preferential trade relations such as tariff elimination applied under the Korea-EU FTA will be applied as is to the Korea-UK FTA, our companies' exports and business will operate stably." Moon Byung-gi, Senior Researcher at the Korea International Trade Association, said, "We were concerned about the impact on our exports and investments not only to the UK but also to EU countries, but as the possibility of a 'hard Brexit' has decreased, the impact on our exports is expected to be minimal."
Earlier, when Brexit was decided by a referendum in the UK in June 2016, both countries established a Korea-UK trade working group at the end of the same year and began informal negotiations. In January last year, through consultations between the trade ministers of both countries, they agreed to promote a Korea-UK FTA of a provisional nature.
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