UK seals South Korea deal to trade 98% of goods tariff-free
It comes just weeks before a low- and zero-tariff agreement between the two countries was due to expire
[LONDON] The United Kingdom finalised a long-awaited free trade agreement with South Korea that the government said would boost exporters from automaker Bentley to beverages firm Diageo.
Trade Minister Chris Bryant sealed the deal in London on Monday (Dec 15) with his South Korean counterpart, Yeo Han-koo, the UK Department for Business and Trade said. 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.
South Korea’s Yeo said that the agreement offered both market-liberalisation measures and cooperation on supply chains and digital trade that would help the two nations respond to changes in the global trade environment.
The UK trade department said that the deal, the fourth struck by the Labour government, would grow UK services exports by £400 million (S$690 million) 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. “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 UK, despite other agreements with India, the United States and the EU. The UK 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 UK on visits abroad, it is on the international stage that he 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 war in Ukraine.
The South Korea deal alone is unlikely to provide any meaningful boost to GDP. It is the UK’s 25th largest trading partner, with total trade in goods and services totalling £15.1 billion in the year to June 2025. But it will be portrayed by the government as another way in which the UK is enhancing its post-Brexit trade position.
Likewise, the agreement will not move the needle for South Korea’s economy, with the UK also the 25th biggest trade partner for Seoul. Still, the deal provides continuity in trade relations without the expiry of the earlier temporary agreement, causing a hiatus.
The deal also fits in with the pragmatic approach to trade negotiations of South Korean President Lee Jae-myung in a world buffeted by US President Donald Trump’s tariffs.
The deal “will help reinforce the rules of the free market and deepen economic cooperation with the UK, a key partner in Europe at a time when the expansion of protectionism is heightening uncertainty in global trade”, Trade Minister Yeo said in a statement.
For the UK, 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 UK 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 sources.
Monday’s deal will secure tariff-free access to South Korea across 98 per cent of tariff lines, the same terms that the EU has with the Asian nation, the department said. It will also update the so-called rules of origin, which dictate how “British” a product must be to qualify for reduced tariffs.
For cars, for example, 55 per cent of the product’s value would previously have had to come from the UK. That has now been reduced to 25 per cent, giving UK manufacturers more flexibility to source materials and components from abroad.
The trade department said that 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
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