South Korea and the United Kingdom have initiated their Free Trade Agreement renegotiations, aimed at better encompassing the latest bilateral advancements in chips and supply chain cooperation.
The effort to enhance cooperation in areas such as semiconductor production and future industries adds weight to U.S. President Joe Biden’s strategy to create an alternative global supply chain that knits democratic nations closer together while requiring less of China’s input.
Delegations comprising approximately 50 representatives from each side began their three-day FTA renegotiations in Seoul Tuesday, South Korea’s Ministry of Trade, Industry, and Energy said in a statement.
Seoul and London are set to discuss ways to “upgrade” their existing agreement, as well as reflect “new trade norms” in the deal, including digitalization, supply chains, clean energy and bioeconomy, according to the ministry.
The talks will solidify the “development of a comprehensive and forward-looking strategic trade relationship by exploring the incorporation of new trade norms in various fields,” the ministry added.
The existing deal, signed in 2019 and came into effect in Jan. 2021, was the first FTA the UK signed with an Asian country as it faced Brexit. The agreement, however, primarily focused on market access for goods and services, neglecting the latest global trade norms amid growing economic-security concerns, particularly in areas such as digital trade and supply chains.
South Korea’s trade minister Jeong In-gyo said during the negotiations in Seoul that the two nations must work together in response to both domestic and international uncertainties.
“The global trade order is undergoing rapid changes, with the spread of protectionism worldwide and the swift restructuring of global supply chains,” Jeong said.
Cutting dependence on Chinese components and resources is seen as a derisking exercise for businesses, given that Beijing has intertwined politics with economics and imposed measures on countries that make political decisions contrary to its interests.
The latest development follows the agreements made between South Korea’s President Yoon Suk Yeol and U.K. Prime Minister Rishi Sunak during the summit in London in November, where the two vowed to further strengthen their economic and technological cooperation, from semiconductors to space technology.
At that time, the two nations signed a Memorandum of Understanding to establish a stable supply chain for the future, while also pledging to cooperate in artificial intelligence, digital technology, nuclear and space technology, biotechnology, quantum technologies, and renewable energy.
South Korea has recently been actively involved in talks with other democratic nations, including the U.S., U.K., Netherlands, Indonesia, India and Japan, a move designed to diversify key resource supply chains to reduce dependence on specific countries.
There has been growing fear in Seoul over the possibility of China using its dominant control of essential resources, such as rare earth materials, as a means of strategic influence in international politics. Such a concern is particularly relevant given the potential impact on crucial South Korean industries like semiconductors and electric vehicles, which could lead to significant economic disruption.
Earlier this month, South Korea also reorganized its National Security Office to prioritize “economic security,” reflecting a growing global trend where countries are combining their economic and political tactics to optimize their diplomatic interests.
Edited by Taejun Kang and Mike Firn.