LONDON/SEOUL: Britain and South Korea have agreed to extend a period of low or zero tariffs on bilateral trade of products with parts from the European Union, the British government has announced, in a boost for the car industry.
Without the two-year extension, British businesses would have faced high tariffs from Jan. 1 on exports of products made using EU components, under so-called rules of origin, and on products shipped via the EU.
Any tariffs could have hurt businesses such as food and drink manufacturers and automakers, potentially leading to higher prices for products such as electric cars.
Annual trade between Britain and South Korea is worth 18 billion pounds ($21.9 billion), and the two sides will begin talks later this year on a new trade deal. Their current agreement was rolled over from Britain's membership of the EU.
Britain's minister for international trade, Nigel Huddleston, said extending the tariff-free period would provide welcome certainty for businesses.
"This is fantastic news for UK businesses who can continue selling their fantastic goods with confidence to South Korea," Huddleston said.
South Korea is the seventh-biggest export market for British-made cars and the third-largest supplier of new cars for Britain, meaning any new tariffs "would have been bad for both sides," said Mike Hawes, the head of the British car industry trade body.
"We look forward to the start of negotiations and swift conclusion of a modernised trade deal that delivers more benefits to our respective automotive sectors, in particular boosting trade in EVs and related technologies," Hawes, the Chief Executive of the Society of Motor Manufacturers and Traders, said.
($1 = 0.8237 pounds) (Reporting by Sachin Ravikumar; Additional reporting by William James, Editing by Louise Heavens) - Reuters
