Other BriefingsUAE, South Korea Sign CEPA Trade Agreement
Bilateral trade up 21% to reach US$3 billion
The UAE and South Korea have signed a Comprehensive Economic Partnership Agreement (CEPA), with the UAE Minister Foreign Trade, Dr Thani bin Ahmed Al Zeyoudi, and Dukgeun Ahn, Minister of Trade for South Korea, concluding negotiations. The UAE is South Korea’s second-largest Arab trade partner, while South Korea is the UAE’s 11th-largest trading partner among non-Arab Asian countries. This development will herald a new chapter of economic cooperation.
The bilateral deal also comes at a time of growing trade exchange between the two countries. In H1 2023, bilateral non-oil trade reached US$3 billion, which is consistent with H1 2022 and up 21% over the same period in 2021.
A UAE – South Korea CEPA will reinforce East-West supply chains, facilitate two-way FDI flows, and enhance joint research and knowledge exchange across a range of sectors, including energy, advanced manufacturing, technology, food security, and healthcare. They will expand economic cooperation in the fields of green economy and clean energy, small and medium enterprises, tourism, space, intellectual property, and information and communication technology.
Al Zeyoudi said, “South Korea is an important growth partner for the UAE, with its highly sophisticated economy built on manufacturing, logistics, and advanced technology. Our two nations share a deep commitment to driving long-term, sustainable growth through trade, investment and economic diversification. Our latest CEPA will drive cooperation across each of them, empowering both economies with new insights, experiences and knowledge. This deal can potentially be a powerful catalyst for innovation and enterprise.”
Respective Free Trade Agreements
South Korea is a member of the Regional Comprehensive Economic Partnership (RCEP) which also includes Australia, New Zealand, China, Japan and the ASEAN nations. This FTA is worth US$12.7 trillion in annual exports – over 25% of global trade in goods and services. UAE investors can access the RCEP deal through investing in South Korea.
In return, the UAE is a member of the Greater Arabic Free Trade Area (GAFTA) which includes Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, the UAE and Yemen. South Korean investors can access this by establishing a permanent presence in the UAE.
Professional advise as concerns accessing either of these agreements should be sought to understand how to maximize the respective trade and tax benefits.
Additional Investments
In January, at the Presidential Summit, the two nations signed a number of memoranda of understanding, including the Trade and Investment Promotion Framework to pursue optimal trade collaboration strategies, covering areas such as supply chains, digital trade, logistics, business environment and technical barriers to trade, and a US$30 billion plan to invest in strategic sectors of the South Korean economy.
In April this year, all four units of the US$20 billion Barakah Power Plant in Abu Dhabi, constructed by the Korea Electric Power Corporation in a consortium that included Hyundai, Samsung, Korea Hydro and Nuclear Power, and Doosan Heavy Industries and Construction, became operational, with the capability of meeting up to 25% of the UAE’s total electricity needs.
This development represents the latest milestone in the UAE’s foreign trade agenda, launched in September 2021 to develop deeper ties with strategic allies worldwide.
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Dezan Shira & Associates assist foreign investors into Asia. We have an office in Dubai and a partner firm in Seoul. For assistance in either market, please contact us at asia@dezshira.com or view our complimentary UAE publications below.
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