UAE and South Korea Forge Landmark Trade Deal, Paving the Way for Closer Economic Ties

The United Arab Emirates and South Korea have solidified their economic partnership through the recent finalization of a comprehensive trade deal aimed at reducing tariffs on a significant portion of imports between the two nations over the next ten years.

Known as the Comprehensive Economic Partnership Agreement (CEPA), this landmark agreement underscores the commitment of both countries to bolstering economic ties and facilitating investment opportunities. Notably, the UAE’s participation in this agreement marks it as the first Arab nation to enter into a free trade arrangement with South Korea, according to reports from the country’s Yonhap news agency.

The official signing ceremony took place during a high-level summit held in Seoul, where UAE Foreign Trade Minister Thani bin Ahmed Al Zeyoudi and Korean Minister of Trade, Industry, and Energy Ahn Duk-geun convened to formalize the agreement. The presence of UAE President Sheikh Mohammed bin Zayed Al Nahyan at the event marked his inaugural official visit to South Korea since ascending to power in 2022, underscoring the significance of the occasion.

President Sheikh Mohammed’s visit aimed to not only strengthen bilateral economic ties but also foster cooperation in the defense sector. Discussions during the visit encompassed various sectors including defense industry collaboration, business ventures, investment opportunities, and energy initiatives. Notably, the President engaged with top business figures from prominent South Korean companies such as Samsung Electronics, Hyundai Motor Group, and SK Group to explore avenues for enhanced cooperation in advanced technology, defense, and energy sectors.

The culmination of the visit resulted in the signing of a diverse array of 19 business agreements spanning investment, energy, nuclear power, defense, technology, climate change, and cultural exchange, as reported by Yonhap. Among these agreements is a memorandum of intent for the construction of six liquefied natural gas carriers valued at $1.5 billion, facilitated by a collaboration between ADNOC L&S, Samsung Heavy Industries, and Hanwha Ocean.

President Sheikh Mohammed reiterated his country’s commitment to investing $30 billion from its sovereign wealth fund in South Korea, echoing a statement made in January 2023. This substantial investment underscores the UAE’s confidence in the Korean economy and its desire to foster long-term economic partnerships.

The CEPA between the UAE and South Korea was initially agreed upon in October, according to the Ministry of Trade, Industry, and Energy of South Korea. This agreement is poised to have a significant impact on bilateral trade, particularly concerning crude oil, as the UAE is a major supplier of crude to South Korea, fulfilling approximately 11% of its total oil needs.

Bilateral trade between the UAE and South Korea amounted to nearly $21 billion last year, indicating the substantial economic ties between the two nations. This trade relationship is expected to flourish further with the implementation of the CEPA, which will facilitate smoother trade flows and greater cooperation across various sectors.

Looking ahead, the UAE aims to bolster its non-oil trade, targeting a goal of 4 trillion dirhams ($1.09 trillion) by 2031 through the signing of additional CEPA agreements and investments across various sectors. Plans are underway to pursue CEPA agreements with Malaysia, Vietnam, and the Philippines in the coming months, as outlined by Minister Zeyoudi.

Following his successful visit to South Korea, President Sheikh Mohammed is scheduled to travel to China to participate in the 10th Ministerial Conference of the China-Arab States Cooperation Forum, further underscoring the UAE’s commitment to strengthening economic partnerships across the globe.