UK-South Korea trade deal: Two experts reveal how Britain’s post-Brexit arrangements are actually going ‘There’s progress, but it’s slow. New deals will be even harder,’ said one expert

Trade experts have welcomed the announcement that the UK and South Korea have signed an in principle post-Brexit trade deal.

However they have warned there is still work to be done to ensure international business continues seamlessly after Brexit, with only 12 of the 40 EU free trade agreements (FTAs) secured for the UK so far.

The South Korea agreement will allow free trade between Britain and the east Asian nation to carry on even if the UK leaves the EU under a no-deal scenario.

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The deal is in line with the EU-Korea FTA. It is one of the largest agreements Britain has signed so far and the first with Asia.

‘Ambitious future FTA’

Signed UK trade deals Andean countries

CARIFORUM trade bloc

Chile

Eastern and Southern Africa ( ESA ) trade bloc

Faroe Islands

Iceland and Norway

Israel

Liechtenstein

Pacific states

Palestinian Authority

South Korea

Switzerland

Announcing the deal, International Trade Secretary Liam Fox, who signed the joint statement with Korean Minister of Trade Yoo Myung-Hee on Monday, said: “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 FTA when we leave the EU.”

In 2018, UK-Korean trade was worth £14.6bn. The value has increased by an average of 12 per cent per year since the EU-Korea FTA was signed in 2011.

Britain mainly receives cars and ship parts from South Korea. The nation imports crude oil, cars and whisky from the UK.

‘Need to see details’

South Korea is an important trade partner for the UK, said David Henig, the UK director of the European Centre For International Political Economy think tank.

“This trade has more than doubled since the introduction of the EU-South Korea FTA in 2011, so the continuity of the agreement after Brexit is welcome,” Mr Henig told i.

“However we need to see the details to know that this will provide continuity, and we understand part of the agreement is that a replacement, possibly more generous to Korea, will have to be negotiated soon after Brexit,” he added.

Former trade negotiator Dmitry Grozoubinski said every continuity agreement signed by the Department for International Trade (DIT) is a “commendable achievement” but added that he needed to see the text of the deal before coming to any firm conclusions about its significance.

‘Won’t address primary Brexit impact’

“While not remotely addressing the primary impact of Brexit in decreasing integration with Europe, [rolling over EU deals] mitigate the marginal impact of Brexit and Korea is a significant market,” he said.

In 2017 there were 6,900 British VAT-registered businesses exporting goods to Korea. The British businesses importing Korean goods to the UK was 5,400.

Sales of British cars to Korea increased by a third to £943 million in 2018.

The UK is South Korea‘s second largest trading partner among EU members.

“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,” said Mr Fox.

“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.”

The agreement will be formally signed once it has been subject to formal checks.

40 EU free trade deals

The DIT has been seeking to secure the 40 EU free trade deals for the UK after Brexit, which cover business with 70 countries worldwide.

Rolling over the deals will allow trade to continue between the UK and other countries even after Britain has left the bloc.

However only 12 deals, including the one with South Korea, have been signed so far.

Asked about how Britain’s post-Brexit arrangements were going, Mr Henig said: “We’re finding out that negotiating trade deals is a tough and slow process, even when there’s an existing agreement you just want to roll over.

“There’s progress, but it’s slow. New deals will be even harder,” he added.

For his part, Mr Grozoubinski said: “The Department of International Trade is making commendable progress, though the rhetoric of successful rollovers sometimes outstrips the more limited reality of the actual deals signed.

“The looming spectre of a no-deal Brexit may push more partners to accelerate negotiations as being one of the few partners with a trade agreement in place with a post-Brexit UK becomes more attractive.”