Other BriefingsGCC-South Korea Free Trade Agreement to Eliminate Almost 90% of Tariffs
On December 28, 2023, the Gulf Cooperation Council (GCC) and South Korea signed a joint statement committing to a free trade agreement (FTA) following six rounds of negotiation that first started in 2007.
By Arendse Huld
When it comes into force, the GCC-South Korea FTA will see the elimination of tariffs on goods and services traded between South Korea and the six GCC member countries (Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain, and Oman) as well as several measures to facilitate bilateral trade and business exchange.
This would be South Korea’s second FTA concluded with an Arab territory. Earlier in the year, South Korea signed an FTA with the United Arab Emirates (UAE), called the Comprehensive Economic Partnership Agreement (CEPA). The GCC also recently signed a preliminary FTA with Pakistan.
According to the South Korean Ministry of Trade, Industry and Energy (MOTIE), the FTA will be formally signed “within the next year”, with no date given for its entry into force.
GCC-South Korea trade
Trade between South Korea and the six GCC countries reached US$102.6 billion in 2022, according to the MOTIE. South Korea’s largest trade partner in the region is Saudi Arabia, followed by the UAE.
| Bilateral Trade Between South Korea and GCC Countries | |||
| Country | Trade volume | Imports (from South Korea) | Exports (to South Korea) |
| Saudi Arabia | 43.2 billion | 5.27 billion | 37.91 billion |
| UAE | 19.46 billion | 3.96 billion | 15.49 billion |
| Oman | 5.66 billion | 350.97 million | 5.31 billion |
| Bahrain | 550.3 million | 196.87 million | 353.46 million |
| Kuwait | 413.9 million | 401.5 million | 12.4 million |
| Qatar | 14.79 billion | 512.82 million | 14.28 billion |
| Unit: USD
Source: ITC Trade Map, Trading Economics |
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South Korea’s main exports to GCC countries include vehicles and auto components, machinery and mechanical appliances, and electrical machinery and equipment, according to ITC Trade Map. Meanwhile, the GCC’s main exports to South Korea include mineral fuels, oils, and products thereof, as well as organic and inorganic chemicals.
Contents of the FTA
The South Korea-GCC FTA aims to significantly enhance economic cooperation and trade relations by removing or reducing trade tariffs and facilitating bilateral trade and business exchange.
Through the implementation of the FTA, it is anticipated that South Korea will be able to increase exports of vehicles, auto parts, machinery, and weaponry to the GCC countries. Meanwhile, cheaper energy imports from the Arab nations are expected to enhance the competitiveness of South Korean exporters.
According to the Secretariat General of the GCC Jasem Mohamed Albudaiwi, the agreement includes “18 chapters, covering trade in goods, services, government procurement, digital trade, cooperation in the field of small and medium-sized enterprises, customs procedures, intellectual property, and other chapters and topics of mutual interest.”
Tariff reductions
According to Yonhap News Agency, under the FTA, South Korea will commit to removing tariffs on 89.9 percent of all items, including crucial products, such as liquefied natural gas, liquefied petroleum gas, and other petroleum goods. In return, the Gulf nations will eliminate tariffs on 76.4 percent of traded products and 4.1 percent of traded goods.
According to the MOTIE, the FTA is also expected to diversify South Korea’s exports to the GCC, expanding beyond traditional sectors to include medical devices, cosmetics, agriculture, livestock, and fishery products. The agreement opens up avenues for distributing films and providing medical and dental services to major GCC nations, per the MOTIE.
Facilitation of business operations and digital trade
According to the MOTIE, the FTA will also aim to facilitate South Korean companies’ business operations in the GCC by easing terms for business immigration and visits, addressing historical challenges for South Korean firms in market entry.
Both parties have also agreed on rules for the protection of intellectual property rights, covering copyright, label, and design, to serve as an effective trade remedy against illegal distribution and misappropriation of products related to “K-content” (Korean media content) while protecting Korean companies’ intellectual property rights.
The FTA also contains a digital trade agreement that will help to promote e-commerce and cross-border data transfer, laying the foundation for the increased expansion of Korean goods and companies into the GCC’s digital market, per the MOTIE.
Comprehensive economic cooperation system
The FTA establishes an “innovative and comprehensive” economic cooperation system centered around 12 main areas, of which six (energy and resources, the bio-economy, advanced industries, smart farms, healthcare, and audiovisual services) have separate annexes laying out “detailed cooperation measures”.
