Automobile Industry: "Korea-UK FTA Improvement Talks... Key Turning Point for Export Expansion"

Significant Easing of Regional Value Content Requirement for Tariff-Free Benefits

The domestic automobile industry has welcomed the conclusion of the Korea-UK Free Trade Agreement (FTA) improvement negotiations last month, stating that it will serve as an important turning point for expanding into the UK market.

Yonhap News Agency

On January 13, the Korea Automobile & Mobility Industry Association stated in a press release, "With the conclusion of the negotiations, the regional value content requirement to qualify for tariff-free benefits has been significantly eased to 25%, greatly improving the conditions for utilizing the FTA."

As of last year, automobiles accounted for 38% of total exports to the UK. Until now, a regional value content of at least 55% was required to qualify for tariff-free benefits.

The association further explained, "Given the high proportion of electric vehicle exports, it will now be possible to reliably enjoy tariff benefits regardless of supply instability or price fluctuations of key battery minerals such as lithium and graphite." The association also expressed positive expectations for the expansion of future vehicle exports.

In December last year, Hyundai Motor Group officially received approval from the global carbon neutrality organization SBTi for its greenhouse gas reduction targets to achieve carbon neutrality by 2045, thereby meeting a key requirement of the UK government's electric vehicle subsidy policy.

The association added, "With increasing uncertainty surrounding automobile exports to the United States, the European market, including the UK, is expected to emerge as a core alternative market to offset the decline in exports to the US. We hope that the necessary procedures, such as parliamentary ratification, will proceed swiftly to ensure the prompt implementation of the agreement."