The UK has reached a preliminary trade deal with South Korea to avoid disruption in case Britain leaves the EU without an agreement. Both countries have agreed in principle on a free trade agreement that will allow businesses to continue trading freely after Brexit, including in a no-deal scenario. The move comes at a time when ministers attempt to secure post-Brexit deals to retain trading rights on preferential terms with countries the UK already benefits from an agreement with under EU membership.
Liam Fox's international trade department has signed continuity deals with nations accounting for about 63 per cent of trade covered by EU deals, including Switzerland, Chile, and the Faroe Isles, up from 28 per cent three months ago. Critics, however, warn that the deals may not cover as much trade as existing arrangements and are incomplete.
The Department for International Trade said the agreement would allow UK firms to continue trading on preferential terms with the Asian nation. In 2018, 99 per cent of British exports to South Korea were eligible to be exported tariff free.
Fox signed the joint statement in Seoul on Monday with South Korean trade minister, Yoo Myung-hee. In a statement, Fox said, “The value of trade between the UK and Korea has more than doubled since the EU-Korea agreement was applied in 2011. Providing continuity in our trading relationship will allow businesses in the UK and Korea to keep trading without any additional barriers, which will help us further increase trade in the years ahead. As we face growing global economic headwinds, our strong trading relationship will be crucial in driving economic growth and supporting jobs throughout the UK and Korea.”
Trade between both countries was worth £14.6bn last year and has increased by an average of 12 per cent a year since the EU signed a free trade agreement with South Korea in 2011. UK exports to South Korea have increased by an average of 18 per cent a year since 2011. British cars are particularly in demand, with exports up by a third to £943m in 2018.
Businesses including the drinks company Diageo and the law firm Clifford Chance welcomed the agreement, as did the Scotch Whisky Association. The latter said South Korea was an important market for Scotch whisky, worth £70m in shipments last year.
Fox tweeted, “This means that whatever happens with Brexit, there will be total continuity in trade between our two countries and the basis for an ambitious future free trade agreement when we leave the EU.”