The United Kingdom has inked a significant new trade agreement with South Korea, designed to bolster exports of British-made cars, Scottish salmon, and Guinness brewed in Britain. The deal, which updates a post-Brexit arrangement from 2019, is projected to inject an additional £400 million per year into the UK economy on top of the existing £15 billion in annual bilateral trade.
Key Sectors and Tariff Changes
Announced by UK Trade Minister Chris Bryant and his South Korean counterpart, Yeo Han-koo, at the Samsung superstore in London's King's Cross, the pact covers crucial sectors including services, automotive, pharmaceuticals, and food and drink. A major shift for the automotive industry involves a substantial reduction in rules of origin requirements.
From January, the threshold for British or EU parts in a car to qualify for zero tariffs on exports to South Korea will be slashed from 55% to 25%. This critical change allows UK car manufacturers to source batteries or components from countries like China while still benefiting from tariff-free access to the South Korean market.
Industry Leaders Hail the Agreement
The deal has been warmly welcomed by leading figures in British industry. Prime Minister Keir Starmer hailed it as "a huge win for British business and working people," positioning it alongside recent UK agreements with India, the US, and the EU.
Richard Molyneux, Chief Finance Officer at Jaguar Land Rover, expressed his support, while Frank-Steffen Walliser, CEO of Bentley Motors, celebrated the "great news" of continued access to a key luxury market. Nik Jhangiani, interim CEO of Diageo, highlighted that the arrangement would "support export growth for Guinness," which is canned in Runcorn and Belfast.
Broader Benefits and Digital Trade
Beyond specific goods, the agreement opens new doors for British services. It grants UK companies the right to tender for public procurement contracts in Seoul, offer legal services, and conduct business via e-contracts for the first time. The deal also ensures tariff-free trade on 98% of goods, aligning UK access with the terms of the EU's trade deal with Seoul.
Minister Chris Bryant stated the pact secures the UK's role as a leader in digital trade and innovation, offering "cast-iron protections" to key industries. His counterpart, Yeo Han-koo, emphasised the deal's importance in strengthening the free-market system during a period of "heightened uncertainty," reinforcing a rules-based trading environment.
This agreement represents a strategic enhancement of the UK's post-Brexit trade portfolio, providing tangible benefits for major exporters and securing vital market access in a dynamic Asian economy.
