South Korea and UAE Establish Groundbreaking CEPA to Strengthen Economic Relations

South Korea and UAE Sign Landmark Economic Partnership Agreement

On May 29, South Korea and the United Arab Emirates (UAE) made history by signing a Comprehensive Economic Partnership Agreement (CEPA) at the Yongsan Presidential Office in Seoul. The signing ceremony, attended by the leaders of both nations, marked a significant milestone in their economic relations and set the stage for enhanced trade and cooperation across various sectors.

The CEPA negotiations commenced in January of the previous year during President Yoon Suk-yeol’s state visit to the UAE. After months of intensive discussions, the agreement was finalized in October of the same year. The UAE currently stands as South Korea’s 14th largest trading partner, with trade volume soaring from $11.3 billion in 2021 to $20.9 billion in 2023. South Korea predominantly exports industrial products like automobiles, electronic devices, and synthetic resins to the UAE, while importing crucial energy and raw materials such as crude oil, petroleum products, and natural gas.

Key figures present at the signing ceremony included South Korea’s Minister of Trade, Industry, and Energy, Ahn Duk-geun, and UAE’s Minister of State for Foreign Trade, Thani bin Ahmed Al Zeyoudi. The CEPA encompasses high-level market opening for goods, with South Korea committing to open 92.5% of its market and the UAE 91.2%. Notable provisions include the immediate elimination of tariffs on machinery, phased elimination of tariffs on automobiles and electronics within five to ten years, and the elimination of tariffs on eco-friendly vehicles within a decade.

Moreover, the CEPA will abolish tariffs on medical devices, cosmetics, and major agricultural and marine products. Tariffs on UAE crude oil imports will be gradually phased out over ten years, while naphtha import tariffs will be halved within five years, bolstering the competitiveness of South Korea’s petrochemical industry. Additionally, the UAE has granted access to its online gaming services market for South Korean companies and agreed to permit South Korean medical institutions to operate locally and offer telemedicine services.

The agreement outlines 14 areas of cooperation, spanning energy, advanced industries, circular economy, audiovisual services, smart farms, healthcare, tourism, transportation, maritime transport, digital economy and trade, precious metals, supply chains, competition, and bioeconomy. It also enhances trade norms related to customs, government procurement, digital trade, and intellectual property rights, thereby boosting predictability and reducing costs for exporters.

A noteworthy aspect of the CEPA is the UAE’s approval of cross-border data transfers for the first time, enabling South Korean firms to transfer locally collected data back to their home country. The agreement also introduces stringent intellectual property protection norms to combat copyright and trademark infringements effectively.

The CEPA is set to take effect on the first day of the second month following the exchange of written notifications confirming the completion of domestic legal procedures in both nations. As South Korea and the UAE gear up to implement the agreement, it is poised to have a profound impact on various sectors, ranging from energy and raw materials to digital trade and healthcare, fostering a stronger and more dynamic economic partnership between the two nations.