The UAE and South Korea have entered into a Comprehensive Economic Partnership Agreement (CEPA) aimed at significantly reducing import duties and bolstering business and investment relations, coinciding with President Sheikh Mohamed bin Zayed Al Nahyan’s visit to the Asian nation.
This accord is South Korea’s inaugural free trade agreement with an Arab country.
CEPA Agreement
The signing ceremony was held during a summit in Seoul, attended by UAE President Sheikh Mohamed bin Zayed and South Korean President Yoon Suk Yeol on Wednesday. The summit, following Yoon’s state visit to Abu Dhabi last year, concentrated on enhancing cooperation in the energy and defence sectors.
“The unique relationship between the two leaders provides an opportunity to advance the countries’ strategic partnership,” stated President Yoon’s office.
Economic Impact
Under the CEPA, both countries will progressively eliminate tariffs on over 90 per cent of imports.
Significantly, the UAE will gradually remove import duties on automobiles over the next decade, while South Korea will lift tariffs on crude oil imports.
“South Korea’s crude oil imports from the UAE are expected to increase,” said Seoul’s Minister of Trade, Cheong In-kyo, during a press conference, emphasising South Korea’s reliance on energy imports.
Expanding Trade
The UAE is South Korea’s second-largest Arab trading partner and ranks 14th globally, contributing to 20 per cent of South Korea’s trade with the Middle East.
By the end of 2022, South Korea’s investments in the UAE had reached $2.2B, while the UAE’s investments in South Korea were $578M.
Sheikh Mohamed expressed optimism about the agreement, stating on social media, “Today’s signing represents a promising step forward as we commit to building upon the robust economic cooperation that links our nations and delivering tangible growth for our peoples.”
During the summit, several other memorandums of understanding (MoUs) were signed, covering areas such as climate change, energy, infrastructure, nuclear power, intellectual property, defence, and technology.
A notable agreement involved South Korean shipbuilders constructing at least six liquefied natural gas (LNG) carriers for the Abu Dhabi National Oil Company (ADNOC), valued at approximately $1.5B, according to Xinhua.
Moreover, the UAE’s sovereign wealth fund reaffirmed its prior commitment to invest $30B in South Korea.
UAE’s CEPA Deals
This CEPA is part of the UAE’s broader strategy to strengthen trade ties globally. The UAE has signed similar agreements with countries including India, Turkey, Israel, Indonesia, and several others.
Upcoming CEPA negotiations are planned with nations like Serbia, Vietnam, and the Philippines.
Bilateral
On Tuesday, President Sheikh Mohamed also met with leaders of South Korea’s top conglomerates, including Jay Y Lee of Samsung Electronics, SK Group Chairman Chey Tae-won, and Kim Dong-kwan of Hanwha Group, a major defence contractor.
These meetings are expected to further strengthen the UAE-South Korea business partnerships.
Sheikh Mohamed’s visit to South Korea is part of a broader diplomatic tour, which includes a state visit to China following his engagements in Seoul.
This landmark agreement and the associated discussions herald a new era of economic collaboration, set to bring significant benefits to both the UAE and South Korea.
