Korea, Czech Republic to sign TIPF agreement in September

Dukovany Nuclear Power Plant in Czechia. [Photo by AFP / Yonhap]

South Korea and the Czech Republic will sign a Trade and Investment Promotion Framework (TIPF) agreement in September 2024, a significant milestone that comes 34 years after diplomatic relations were established in 1990.

Maeil Business Newspaper reported on Sunday that Trade, Industry, and Energy Minister Ahn Duk-geun and Czech Industry and Trade Minister Jozef Síkela plan to finalize the TIPF agreement next month during President Yoon Suk Yeol’s visit to the Czech Republic. The draft TIPF was agreed upon in April, with the final agreement set to be concluded during the Korea-Czech summit in September, according to a government official.

The TIPF, a comprehensive industrial and investment cooperation agreement, does not require parliamentary ratification and takes effect upon signing. It aims to strengthen economic cooperation while serving as a foundation for a potential Free Trade Agreement (FTA) or tailored cooperation systems. Tariff negotiations and market opening, however, are excluded.

Introduced under the Yoon administration, Korea signed its first TIPF with the United Arab Emirates (UAE) in January 2023 and has since signed agreements with 23 countries. Korea has TIPFs with Poland, Hungary, Finland, and Bulgaria in Europe, and aims to increase this number to 40.

The Czech government selected Korea Hydro & Nuclear Power Co. as the preferred bidder for a nuclear power plant construction project worth 24 trillion won ($17.7 billion) in July 2024. The Korean government aims to use this project as a catalyst to enhance economic cooperation with the Czech Republic in areas beyond nuclear power.

“Korea’s involvement in the new Czech nuclear power plant, from construction to operation, will lead to a long-term bilateral relationship,” an industry insider said. The Czech Republic also anticipates cooperating with the Korean government and companies in energy and high-tech industries, including hydrogen, semiconductors, and secondary batteries, the insider added.

With regular channels and tangible results in industrial cooperation, trade between the two countries is expected to increase significantly. According to the Korea International Trade Association, trade volume between Korea and the Czech Republic rose from $2.97 billion in 2019 to $4.4 billion in 2023, a 1.5-fold increase over a four-year period. Trade volume has increased more than eightfold since the establishment of diplomatic relations in 1990, and the TIPF is expected to further boost trade.

“Nuclear power projects require long-term and continuous communication between governments until they are executed. Ensuring more of our products enter the Czech market is also a crucial task for the Korean government,” Hur Jung, a professor at Sogang University, said.