South Korean firms may face non-tariff barriers following Britain's departure from the world's single largest economic bloc despite a new trade agreement between Seoul and London, a local think tank said Saturday.
Last week, the two sides inked a free trade agreement (FTA) centered on maintaining mutual benefits under the FTA with the European Union that took effect in July 2011 even after a no-deal Brexit, amid the looming possibility of London leaving the EU without an agreement.
"For now, Britain is highly expected to declare the no-deal Brexit on October 31," said Oh Tae-hyun, a senior researcher from the Korea Institute for International Economy Policy (KIEP).
Korean companies may still face hurdles in seeking continuity in their exports to Britain as it will take time to adjust to the post-Brexit business environment.
"Rather than tariff barriers, major risks would be other export and import procedures, including certification of pharmaceutical goods and chemical products," Oh said.
Concerns over a no-deal Brexit have been looming as London has been facing challenges in finding common ground in the divorce agreement with the EU, especially on the "backstop" issue that centers on the border problem between Northern Ireland and Ireland.
South Korea and Britain are set to finalize the remaining procedures of the FTA before the end of October, when London is scheduled to depart from the union.
South Korea's top export products to Britain were cars, ships, and marine facilities in 2018. In return, Seoul mainly imported crude oil, cars, and pharmaceutical goods, according to the Korea International Trade Association. Their bilateral trade is estimated at US$13.1 billion last year.
The Bank of Korea, meanwhile, said last week the no-deal Brexit would still only have a limited impact on the country's economy, considering London takes up only around one percent Seoul's annual exports. (Yonhap)