South Korea, UK can trade freely after Brexit

By Richie Santosdiaz

Irrespective of politics, South Korea and the United Kingdom (U.K.) will sign a “continuity” trade agreement, which will allow businesses to trade freely after Brexit.

The U.K.'s International Trade Secretary Liz Truss and South Korea's Trade Minister Yoo Myung-hee announced in London on Aug. 22 that they will sign a “continuity” trade agreement that will ensure businesses are trading freely.

Well ahead of the U.K.'s planned departure from the European Union (EU), which under the leadership of new Prime Minister Boris Johnson looks highly likely at the end of October with a no-deal that has caused much uncertainly. In particular, within the business community there is not much clarity; businesses might not be prepared for a world post-U.K. membership in the EU.

People may wonder why the U.K. and South Korean announcement is important. It is for various reasons.

First, through the U.K.'s current membership with the EU, it enjoys a free trade agreement with Korea. Known as the EU-South Korea Free Trade Agreement, it has been provisionally applied since July 2011 and formally ratified in December 2015. The trade agreement was also the EU's first free trade agreement with an Asian nation.

How impactful is this relationship between the EU and South Korea at present? According to facts from the European Commission website, both South Korea and the EU are benefiting from both international trade and foreign direct investment (FDI) flows.

South Korea is the EU's ninth-largest export destination for goods, while the EU is the third-largest export market for South Korea. For South Korea, the EU represents the biggest foreign direct investor. While for the EU, it has a significant surplus in trade in services with Korea.

Specifically, the U.K. and South Korea have a strong trading relationship with the potential to growth further, where last year saw 14.6 billion pounds ($17.7 billion) in trade between both.

In fact, since the EU-South Korea Free Trade Agreement was signed in 2011, both the U.K. and South Korea have seen trade grow annually averaging around 12 percent. In 2017, there were 6,900 British businesses that were exporting goods to Korea, which according to the U.K. government website amounted to 5.8 billion pounds ($7.03 billion).

Some U.K. sectors in particular have strong trade links and the recent continuity agreement post-Brexit will offer assurances to them and their industries as a whole.

For example, the U.K.'s Bentley Motors, which entered the Korean market in 2006, had a 30-fold increase in exports between its entry in the market and 2015. Last year the U.K. car industry as a whole exported nearly 1 billion pounds ($1.2 billion) to Korea.

Other U.K. goods and services that are being exported to Korea include ceramic products, (17 million pounds or $20.61 million in 2018 ― a 40 percent increase from 2010) and professional and management consulting services (256 million pounds or $310.35 million ― an increase of 8 percent from 2017).

Last year South Korea exported around 5.2 billion pounds ($6.3 billion) to the U.K. As a global leader in electronics, steel, ships and the automotive industry, much of these, particularly the last two, were among the exports.

Like much of the rest of the world, Korean brands such as LG, Samsung and Kia can be commonly found across many homes and establishments across Great Britain and Northern Ireland. This, not just in the U.K. but much of the world, is a testament to the innovation and leading market share Korean brands now have in the global economy.

For South Korea and the U.K. to have a continuity trade agreement at the end of the day helps both parties. Since the free trade agreement between Korea and the EU, both have benefited. Having little interruption of this ensures both the U.K. and Korea maintain that.

Particularly for Korea, it can still have a potential free trade link to the U.K. without alienating the remaining EU members with its current free trade with Brussels. Brexit might not be a hard Brexit at the end of October, but if it is (which is looking likely at present), then at least Korea and the U.K. can continue to freely trade ― politics aside.

Richie Santosdiaz (

santosdiazr2@gmail.com) is an economic development expert in the management consulting context, where he mainly advises governments and multinationals in this realm.