UAE-South Korea sign historic CEPA deal during President Sheikh Mohamed’s visit

The UAE and South Korea signed a Comprehensive Economic Partnership Agreement (CEPA) to significantly reduce import duties and enhance business and investment ties, during President Sheikh Mohamed bin Zayed Al Nahyan ‘s visit to the Asian country.

This agreement marks South Korea’s first free trade pact with an Arab nation.

CEPA deal

The signing ceremony took place during a summit in Seoul attended by the UAE President Sheikh Mohamed bin Zayed and South Korean President Yoon Suk Yeol on Wednesday. The summit, which followed Yoon’s state visit to Abu Dhabi last year, focused on strengthening cooperation in energy and defense.

“The special bond between the two leaders serves as an opportunity to advance the countries’ strategic partnership,” stated President Yoon’s office.

Economic impact

Under the CEPA, both nations will eliminate tariffs on more than 90 per cent of imports over time.

Notably, the UAE will gradually abolish import duties on automobiles over the next decade, while South Korea will remove tariffs on crude oil imports.

“South Korea’s crude oil imports from the UAE are expected to increase,” said Seoul’s Minister of Trade, Cheong In-kyo, during a press conference, highlighting South Korea’s dependency on energy imports.

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

Expanding trade

The UAE is South Korea’s second-largest Arab trade partner and the 14th largest globally, accounting for 20 per cent of South Korea’s trade with the Middle East.

By the end of 2022, South Korea’s investments in the UAE had reached $2.2bn, while the UAE’s investments in South Korea stood at $578m.

Sheikh Mohamed expressed optimism about the agreement, stating on social media, “Today’s signing represents a promising step forward as we commit to building upon the robust economic cooperation that links our nations and delivering tangible growth for our peoples.”

During the summit, several other memorandums of understanding (MoUs) were signed, covering areas such as climate change, energy, infrastructure, nuclear power, intellectual property, defense, and technology.

One notable agreement involved South Korean shipbuilders constructing at least six liquefied natural gas (LNG) carriers for the Abu Dhabi National Oil Company (ADNOC), valued at approximately $1.5bn, as per Xinhua.

Furthermore, the UAE’s sovereign wealth fund reaffirmed its previous commitment to invest $30bn in South Korea.

UAE’s CEPA deals

This CEPA is part of the UAE’s broader strategy to strengthen trade ties globally. The UAE has signed similar agreements with countries including India, Turkey, Israel, Indonesia, and several others.

Upcoming CEPA negotiations are planned with nations like Serbia, Vietnam, and the Philippines.

Read: CEPA: UAE, New Zealand launch talks for a free trade deal

Bilateral

On Tuesday, President Sheikh Mohamed also met with leaders of South Korea’s top conglomerates, including Jay Y Lee of Samsung Electronics, SK Group Chairman Chey Tae-won, and Kim Dong-kwan of Hanwha Group, a major defense contractor.

These meetings are expected to further bolster the UAE-South Korea business partnerships.

Read: UAE President Sheikh Mohamed in South Korea: Highlights of Day 1

Sheikh Mohamed’s visit to South Korea is part of a broader diplomatic tour, which includes a state visit to China following his engagements in Seoul.

This historic agreement and the accompanying discussions signify a new era of economic collaboration, poised to bring significant benefits to both the UAE and South Korea.