UAE, South Korea formally sign CEPA agreement

The UAE and South Korea formally signed a Comprehensive Economic Partnership Agreement (CEPA) on Wednesday, aiming to expand trade and enhance cooperation in a wide array of areas from energy to supply chains.

The signing ceremony in Seoul came around seven months after the two countries struck the deal in October, according to the Ministry of Trade, Industry and Energy.

The event came in line with UAE President Mohamed bin Zayed Al Nahyan's two-day visit to South Korea, which started the previous day, for a summit with President Yoon Suk Yeol.

Industry Minister Ahn Duk-geun signed the agreement with his UAE counterpart, Thani bin Ahmed Al Zeyoudi, in the presence of the two leaders. 

The CEPA is a type of free trade agreement that emphasises a broader scope of economic cooperation and exchanges in addition to market opening. It marks the first time South Korea has clinched a free trade agreement with a Middle Eastern nation.

I was pleased to meet @President_KR Yoon Suk Yeol in Seoul and engage in constructive discussions on strengthening bilateral ties. Together, we witnessed the signing of numerous MoUs and the Comprehensive Economic Partnership Agreement between the UAE and Republic of Korea.… pic.twitter.com/LY1j1dKryZ

— محمد بن زايد (@MohamedBinZayed) May 29, 2024

Under the agreement, the two countries will lift tariffs on more than 90 per cent of goods traded over the next 10 years.

The UAE will especially lift tariffs on South Korea's major export goods, including cars, auto parts, defense items, fruits and instant noodles.

The government anticipates that the free trade agreement with the UAE will significantly boost South Korean carmakers' presence in the Middle East.

South Korea's automobile exports to the UAE reached $483 million in 2023, marking a 43 per cent increase from the previous year.

The CEPA will gradually eliminate the three per cent tariffs on crude imports from the UAE over the next 10 years. The UAE currently accounts for 11 per cent of South Korea's total crude imports.

The agreement is expected to help South Korea secure a stable supply of crude, enhancing the price competitiveness of oil refiners as well.

The two countries are anticipated to bolster exchanges in energy, supply chain, digital and biotechnology sectors to seek future-oriented economic cooperation through the CEPA, the ministry added.

The UAE stood as South Korea's 14th-largest trade partner as of 2023. Following Saudi Arabia, it is the second-biggest partner for Asia's fourth-largest economy in the Middle East.