Korea, UAE conclude talks for bilateral trade deal

[Courtesy of Ministry of Trade, Industry and Energy]

South Korea concluded negotiations with the United Arab Emirates (UAE) for a Comprehensive Economic Partnership Agreement (CEPA), a type of free trade agreement (FTA). The agreement is expected to strengthen cooperation with the UAE, a key country in the Middle East, while laying the groundwork for energy security and the development of new export markets. This is the first time Korea has signed a FTA with an Arab country.

According to the country’s Ministry of Trade, Industry and Energy on Sunday, Trade Minister Ahn Duk-geun and UAE Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi signed a joint declaration confirming the conclusion of CEPA negotiations between the two countries on Saturday in Seoul.

CEPA is a FTA that includes measures to strengthen and expand exchanges and cooperation in various fields, including expanding market access for goods and services through tariff reductions. The Korea-UAE CEPA is the 24th FTA that Korea has signed.

Under the agreement, both countries will open 92.8 percent and 91.2 percent of their markets to each other in terms of the number of product items over the next 10 years. The UAE will eliminate tariffs on key Korean exports such as automobiles and automobile parts, home appliances, and weapons, while also removing tariffs on promising Korean export items, including medical devices and cosmetics, as well as agricultural, livestock, and fishery products, including beef, chicken, fruit, and ramyeon.

In the services market, the UAE committed to the highest level of openness out of its CEPA agreements to date for video and music content as well as healthcare. Tariffs on crude oil will also be completely phased out over the course of 10 years. The elimination of tariffs on crude oil, which is sensitive to price fluctuations, is expected to make the Korean refining industry more cost-competitive and enable industries to use petroleum products as raw materials to secure price competitiveness.

The UAE is Korea’s third largest source of imported crude oil, supplying approximately 10 percent of Korea’s total oil imports.