On August 22, 2019, the United Kingdom (UK) and the Republic of Korea (Korea or South Korea) signed a continuity Free Trade Agreement (FTA).1 In the event of a no-deal Brexit on October 31, 2019, the UK - Korea trade agreement will enter into force, allowing British and Korean businesses to continue to trade on the same preferential terms under the European Union (EU) - Korea FTA.
To seek continuity for existing EU trade agreements to which the UK participates as an EU Member State, the UK has so far signed 13 trade agreements with 38 countries, for instance, with Chile and Switzerland.2 South Korea is the first Asian trading partner to sign a trade continuity agreement with the UK to be applied after Brexit.
The UK - Korea trade agreement replicates the EU - Korea FTA, as far as possible, with some technical changes. Below we provide a brief description tariff rules, preferential origin, agricultural safeguard measures and intellectual property under the new UK - Korea FTA. The full text of the agreement is available here.3
The UK and Korea agreed to apply in the new agreement the same concessions that existed under the EU - Korea FTA, which has been applying since July 2011. Under the EU - Korea FTA, zero tariffs are applied to all the industrial goods and 98% of agricultural goods.4 This will be equally applicable to bilateral trade between the UK and Korea under the UK - Korea FTA.5 Accordingly, 99% of British products would enter the Korean market without tariffs, and vice versa. In particular, automobiles and automotive parts will be exported without tariffs.
Rules of Origin
The UK and Korea further agreed that UK products with EU-27 contents would benefit from preferential treatment under the UK - Korea FTA.6 This rule is temporarily applicable for three years.7 This is meant to allow British and Korean companies to use EU parts and still benefit from preferential UK-Korea FTA origin, for a transitional period that is long enough to enable them to adjust their supply chains.
Note that to date the EU has refused to do anything similar, and that the European Commission has repeatedly stated that UK goods will cease to be considered as originating immediately after Brexit.
Agricultural Safeguard Measures
Compared to those under the EU - Korea FTA, the UK and Korea lowered the aggregate volume of imports that would trigger agricultural safeguard measures in the form of a higher import duty. The lower aggregate volume...