South Koreas parliament held a plenary session on October 28 and voted to approve the South Korea UK free trade agreement (FTA), Yonhap reported. South Koreas trade ministry said in a statement that in the increasingly complex test of Britains brexit, the new agreement protects the stability and continuity of bilateral trade.
New agreement keeps old partner
According to South Korean media reports, the free trade agreement between South Korea and Britain will enter into force automatically on the date of brexit. At that time, South Korea will enjoy preferential tariff treatment regardless of the form of brexit.
In fact, as early as the end of 2016, the two countries established a FTA working group to start negotiations. On August 22 this year, the two sides formally signed a free trade agreement. It is reported that the content of the agreement is basically consistent with the terms of the existing South Korea EU free trade agreement. Since then, South Korea has been actively preparing to complete the relevant procedures such as parliamentary approval before October 31 this year, when the UK originally set the time of brexit.
At present, the EU has signed about 40 free trade agreements, covering more than 70 countries. It was pointed out that the FTA between the UK and the ROK will maintain the continuity of trade relations between the UK and the ROK, so that enterprises of both sides can continue to trade without any additional trade barriers.
However, the FTA between Britain and South Korea is not a permanent trade agreement, and the two countries need to renegotiate it within two years. Cui Hongjian, director of the European Institute of the Chinese Academy of international studies, analyzed in an interview with this newspaper: according to EU law, the UK has no right to negotiate free trade agreements with other non EU countries before leaving the EU. Specific issues, such as tariffs, can only be further agreed upon after Britains real brexit
Pave the road ahead of time to attract investment
It is worth noting that the signing of the FTA between the UK and the ROK is not a case in point. Since the start of the brexit process, the UK has been striving to reach new agreements with non EU trading partners, BBC reported. Britains trade with these countries accounts for about 11% of Britains total foreign trade. The UK said it hoped to copy as much as possible the EUs trade agreement and ensure that it was ready to leave without an agreement. So far, the UK has signed 18 new trade agreements covering 48 countries or regions, involving about 8% of the UKs total foreign trade.
In June 2016, the UK officially launched the brexit process. After several delays and mediation, the EU recently agreed to extend the flexibility of brexit to January 31, 2020. On October 30, the British House of Commons approved the proposal to hold a new round of general election on December 12, 2019. To this day, although the prospect of brexit is still unclear, it is clear that Britain has begun to pave the way ahead of time.
The EU market remains the largest part of the UKs foreign trade structure. In addition to carrying out free trade diplomacy to attract investment, the UK also proposed more preferential policies to attract investment. By doing so, the UK can not only exert pressure on the EU in the negotiation of brexit, but also maintain the confidence of the outside world in the investment environment of the UK after brexit, consolidate the image of market opening and investment opening of the UK, and enable the UKs advantageous industries to better enter the African Union economy. When the brexit is not completed, the UK is negotiating free trade agreements with other countries. On the one hand, it is out of political considerations to stabilize the confidence of the brexits; on the other hand, it is to pave the way for looking for import and export alternatives after brexit, Cui said
More political gestures
Britains frequent actions seem to have prepared a backhand for brexit, but the impact of brexit on British trade is still full of variables.
According to Cui Hongjian, the populist forces who advocate brexit and the elites who insist on market opening will continue to struggle. Will Britain be more open or more conservative after brexit? If the problem is not handled properly, the UK economy may be affected or even shrink. In particular, the UKs over dependence on the financial services industry, incomplete industrial chain and reduced capital investment supporting innovation will be further exposed.
The size of the UK market is not attractive enough compared to the EU single market. If Britain does not handle its economic and trade relations with the EU well, its short-term disadvantages after leaving the EU market cannot be made up. These agreements with non EU countries before the end of the brexit process more reflect the political stance of the UK, so there may be exaggeration or deviation from economic demand, Cui said. When the two sides really enter into substantive trade negotiations, the differences will be fully revealed, and the difficulties and twists of the negotiations at that time may hit the current political efforts.
Source: editor in charge of overseas network: huachengyu