Tariff-free access: Starmer delivering a speech in central London. The deal is a small boost for the premier, who has so far struggled in his quest to generate economic growth in the United Kingdom. — Reuters
LONDON: The United Kingdom finalised a long-awaited free trade agreement with South Korea that the government says would boost exporters from automaker Bentley to beverages firm Diageo.
Trade Minister Chris Bryant sealed the deal in London on Monday with his South Korean counterpart, Yeo Han-koo, the UK Department for Business and Trade said in an emailed statement.
It comes just weeks before a low- and zero-tariff agreement between the two countries, carried over from Britain’s membership of the European Union (EU), was due to expire.
The trade department said the deal – the fourth struck by the Labour government – would grow UK services exports by £400mil as firms gain improved access to South Korea’s financial market, while also easing the export of Bentley’s luxury cars, Diageo’s Guinness, and salmon from Scotland.
“This deal making trade even easier between us will help boost the economy – supporting jobs and growth which will be felt all over the country,” Prime Minister Keir Starmer said in the statement. “This is a huge win for British business.”
The deal is a small boost for Starmer, who has so far struggled in his quest to generate economic growth in the United Kingdom, despite other agreements with India, the United States and the EU.
The United Kingdom is at risk of its first quarterly contraction since Labour returned to power in July 2024, after official data last week showed growth fell in October, the second monthly contraction in a row.
While the prime minister has been criticised for spending time away from the United Kingdom on visits abroad, it is on the international stage that Starmer has secured some of the biggest successes of his premiership, including keeping US President Donald Trump’s administration largely on-side and helping to coordinate Europe’s response to the ongoing war in Ukraine.
The South Korea deal alone is unlikely to provide any meaningful boost to gross domestic product – it is the UK’s 25th largest trading partner, with total trade in goods and services totalling £15.1bil in the year to June 2025 – but will be portrayed by the government as another way in which the United Kingdom is enhancing its post-Brexit trade position.
Signing trade deals with countries outside the EU was touted by proponents as one of the key benefits of Brexit, but few have yet been completed and none have provided the value offered by rejoining the single market or customs union.
Starmer will continue negotiations on a sanitary and phytosanitary agreement with the EU next year, to reduce the burden of trading agricultural products.
A free trade agreement between the United Kingdom and the six countries in the Gulf Cooperation Council – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – is also near to completion, according to multiple people with knowledge of the matter.
In 2023, the United Kingdom and South Korea agreed to extend for two years an agreement which eliminated or kept tariffs low on around £2bil of UK exports, while they negotiated a broader free trade agreement.
Monday’s deal will secure tariff-free access to South Korea across 98% of tariff lines – the same terms that the EU has with the Asian nation, the department said in the statement.
It will also update so-called rules of origin, which dictate how “British” a product must be in order to qualify for reduced tariffs.
For cars, for example, 55% of the product’s value would previously have had to come from the United Kingdom.
That’s now been reduced to 25%, giving UK manufacturers more flexibility to source materials and components from abroad.
The trade department said the deal would also allow the use of e-contracts and other digital technology to make it quicker and cheaper for UK firms to sell to Korea. — Bloomberg
