An automotive parts manufacturer based in the Gumi National Industrial Complex in North Gyeongsang Province, South Korea, filed for court rehabilitation yesterday, on 31 March, after failing to honour promissory notes.

In spite of its £17.3 million annual turnover, and holding innovation certification, the company cited a “sharp decline in order volumes” as the primary cause of its distress.

This case exemplifies broader challenges facing Korean manufacturers, with two automotive parts suppliers in the country declaring bankruptcy in March alone. The sector’s troubles come before US President Donald Trump’s tariffs have fully taken effect – a 25% levy on imported vehicles starts 2 April, with component tariffs following in May.

Manufacturing production had already contracted by 4.2% year-on-year in January, with the Business Survey Index (BSI), which measures the economic sentiment of the top 600 South Korean companies, remaining below the 100-point threshold for thirteen consecutive months. 

The Business Survey Index (BSI), which measures the economic sentiment of the top 600 South Korean companies, is at 92. A BSI below 100 means companies have a negative outlook on the economy. The BSI currently stands at 92, indicating that many businesses are pessimistic about future growth and economic conditions. 

“Exports are expected to fall from April,” said Chun Kyu-yeon, an economist at Hana Securities, as a result of reciprocal tariffs on automobiles. While South Korea’s total March exports increased by 3.1% in March, this fell short of the expected 3.5% growth.

South Korea’s steel exports dropped 10.6% in March, in correlation with the US imposition of a 25% tariff on steel last month.

This extends beyond automotive parts: after Trump unveiled a 25% tariff on automobiles last Wednesday on 26 March, shares in Korean imported vehicles were rattled. Hyundai Motor lost 11.2% in the three sessions following the annonucement, and Kia Corp fell more than 3% after Trump’s announcement. South Korea’s Industry Minister Ahn Duk-geun warned of the “considerable difficulties” this uncertainty would bring.

The stakes are significant: South Korean automotive parts exports to the US reached £6.3 billion last year, representing 36.5% of the nation’s total component exports. South Korea’s exports of automobiles to the United States stood at $34.7 billion in the same period, accounting for 49% of its total auto exports. South Korean brands (Hyundai and Kia) also make up two of the eight top car brands in terms of auto sales in the US. 

The Korean government plans emergency measures for the automotive sector in April, with further initiatives for petrochemicals and component manufacturing to follow.

Industry representatives are calling for subsidies and tax relief comparable to those offered by competitors such as the US and Japan to weather what they describe as an “unprecedented crisis” for key industries.

While a significant share of media attention is diverted towards the rhetoric and ideological implications of tariffs, such cases reiterate that tariffs will harm the businesses – often small and medium-sized enterprises (SMEs) – which make up the foundation of international supply chains. As such, these bankruptcies portend a far weakened structure upon this foundation.

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The unprecedented measure, unveiled on Thursday as part of the government’s 2025 Economic Policy Direction, comes as Asia’s fourth-largest economy braces for tepid export growth of just 1.5% this year, down sharply from 8.2% in 2024.

The government has earmarked 95 trillion won specifically to help Korean firms secure large-scale overseas orders through 2028.

The semiconductor industry, which accounted for 20.8% of total exports in 2024, will receive particular attention. 

The government plans to increase investment tax credits and provide 14 trillion won in low-interest financing to chip makers. It will also shoulder more than half the costs of infrastructure development in the planned Yongin-Pyeongtaek semiconductor cluster, set to become part of the world’s largest chip manufacturing hub.

To reduce its dependence on major markets, Seoul is expanding its global logistics network. New joint logistics centres will be established in Eastern Europe and additional US locations, complementing existing facilities in the Netherlands, Spain, Indonesia, and the US West Coast.

Seoul is particularly concerned about intensifying competition in key industries and potential disruptions from shifts in US trade policy, particularly under the US Inflation Reduction Act following Donald Trump’s return to presidential office.

The comprehensive package includes extended tax relief for small and medium-sized exporters, including postponed corporate tax payments and expedited VAT refunds. The government will also increase support for emerging sectors such as electric vehicles, with plans to expand charging infrastructure significantly by year-end.

This intervention is evidently designed to protect the country’s export-driven economy, which relies on overseas shipments for nearly 40% of its GDP.

South Korea is grappling with the aftermath of suspended president Yoon Suk Yeol’s shortlived declaration of martial law in the country on 3 December; the dramatic move sent shockwaves through financial markets, dampened business confidence, and hampered the nation’s diplomatic initiatives.

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South Korea’s central bank delivered an unexpected interest rate cut on Thursday, signalling further monetary easing.

The move comes as trade uncertainties mount, linked to Donald Trump’s upcoming return to the US presidency.

The Bank of Korea (BoK) reduced its benchmark interest rate by 25 basis points to 3.00%, a move anticipated by only a minority of economists. The bank’s seven-member board approved the cut with a five-to-two majority: economic deliberations underlying the decision have been nuanced.

Governor Rhee Chang-yong noted that three board members were receptive to additional monetary loosening in the coming quarter, citing concerns about intensifying export competition and trade environment volatility following Trump’s election victory.

This rate reduction is the first back-to-back cut since early 2009, indicating a strategic shift towards stimulating economic growth as inflationary pressures seemingly stabilise. Asia’s fourth-largest economy confronts potential challenges, including the risk of elevated tariffs and the prospect of trade tensions with China.

The government has highlighted the importance of maintaining robust economic relationships with the US a major trading partner. In September 2024, South Korea exported $10.4 billion and imported $5.44 billion from US, resulting in a positive trade balance of $4.97 billion. 

Nonetheless, the South Korean government intends to support domestic industries, particularly the semiconductor sector, which could face challenging policy environments under Trump.

South Korea narrowly avoided a technical recession in the third quarter, with growth marginally expanding 0.1% following a previous contraction. Private consumption recovery has decelerated, and export performance has stagnated.

The BoK has correspondingly adjusted its economic forecasts downward. The 2024 growth projection has been reduced from 2.4% to 2.2%, with next year’s outlook at a modest 1.9%. Inflation expectations have similarly been tempered, now projected at 2.3% for the current year.

Responding to potential market volatility, Governor Rhee pledged to collaborate with the government to stabilise foreign exchange markets as necessary. Policy-sensitive three-year treasury bond futures responded positively, rising 0.22 points to 106.63, while the won experienced marginal depreciation.

Central banks in New Zealand, Canada, and Sweden have similarly implemented significant rate reductions in recent months.

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This is one of the most consequential US elections in history, which has been mainly determined by what’s at stake in an ideological or geopolitical domain.

But we at TFG think it’s essential to fully explore what Donald Trump’s second presidential victory may mean for the world of trade, treasury, and payments. It’s with this regard that President Trump can redefine the world.

We recorded an emergency livestream with four industry heavyweights:

◾ Dr Rebecca Harding, Independent Trade Economist, REBECCANOMICS LIMITED
◾ Dr Robert Besseling, CEO, PANGEA-RISK
◾ Simon Evenett, Professor of Geopolitics & Strategy, IMD Business School, Co-Chair, World Economic Forum Global Future Council on Trade & Investment
◾ Dr Alisa DiCaprio, Former Chief Economist, R3

What was covered:

• How Trump’s trade policy differs from Biden’s (if at all).
• US-China trade relations and economic wargaming – how increasing tariffs on 818 categories of Chinese goods impacts 2025 policy.
• How a second Trump presidency could impact trade relations between the US and Africa and the Middle East.
• What does the decline of multilateral trade agreements mean for ongoing negotiations and existing trade pacts (think: withdrawal from the Trans-Pacific Partnership and replacing NAFTA with the USMCA agreement)?
• Money markets: with US stocks surging and European renewable stocks falling, how Trump’s stance on climate change and energy policy might impact global commodity markets and trade flows.
• What we can expect Trump’s impact to be, on trade and SCF.
• What regions are likely to be singled out from a more combative trade policy, and what methods there are for assessing and monitoring as the effects of Trump become realised.
• The impact of protectionist trade on currency markets and international capital flows.

The post TFG hosts emergency broadcast: Global trade according to President Trump appeared first on Trade Finance Global.

Credit insurance and factoring work together to mitigate risks and enhance business liquidity, making them vital tools for navigating international trade. Factoring converts receivables into immediate cash, while credit insurance protects against buyer non-payment, providing businesses with the confidence to enter new markets. 

The mini magazine outlines some challenges with integrating credit insurance and factoring and posits as to how technology can be leveraged to streamline processes, enhance decision-making, and improve transparency in credit insurance and factoring. It also turns to the future, considering how regulatory changes – particularly Basel III and IV – will impact the factoring and credit insurance industry.

The panel consisted of Shan Aboo, Chief Commercial Officer for Asia Pacific, Allianz Trade; Neil Shonhard, Chief Executive Officer, MonetaGo; Dorota Szcześniak, Member of FCI Executive Committee and Supply Chain Finance Committee; and Karol Leszczynski, Product Manager, Comarch. The breadth and depth of their collective expertise ensures that the topic is done justice when translated into a magazine format.

Deepesh Patel, Editor-in-Chief at TFG, said, “This publication comes at a crucial time. Businesses worldwide are seeking ways to navigate uncertain markets, placing factoring and credit insurance at the forefront of the discussion. I had a fascinating discussion with the panel in Seoul, and I’m confident that this resource will prove invaluable for factors, insurers, businesses, and anyone interested in the future of trade.”

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Trade finance is an expansive industry, touching all corners of the globe, and used in every industry. 

Because it is so prevalent, it would be easy to continue with the status quo and let the market play itself out. 

However, the reality is that dynamics are constantly changing, and require collaboration and guidance from all to ensure prosperity across the board.

How do we achieve this and how do we build these processes into the industry?

To talk about some of these points, Deepesh Patel spoke with Kai Fehr, Global Head of Trade and Working Capital at Standard Chartered Bank at FCI’s 56th Annual Meeting in Seoul.

The role of trade finance in global prosperity

The potential of trade finance to act as a catalyst for economic growth and stability is immense. 

Standard Chartered reviewed the pools of revenue wallets for trade finance overall, and found an estimated $50 billion revenue wallet globally. These numbers suggest significant opportunities across diverse regions. 

The major revenue shares lie within Europe ($25 billion), Asia ($16 billion), and the US ($8 billion), with Asia, in particular, presenting robust growth opportunities especially in open account transactions.

But these numbers are changing, and so are the dynamics of trade finance. 

Fehr said, “When we look into the development in the world with changing supply chain, you need to have a proposition how you tap into these wallets because around two-thirds of them sit in the open account space.” 

This represents roughly only $18 billion of revenue from the traditional trade finance instruments, such as letters of credit and guarantees, and these numbers have been consistent for many years.

This trend is particularly noticeable in Asia, where open accounts are growing at around 15% rate. 

If you want to take advantage of the growth, companies need to rethink their trade finance strategies.

Trade finance instruments are not the only aspects of the industry undergoing major changes. The locations of physical supply chains are changing. Fehr said, “Almost 70% of our clients are telling us that they are changing their sourcing and supply chains.”

According to Fehr, countries like Poland, Mexico, Malaysia and Thailand are poised to benefit from this restructuring.

Developing products to support growing markets

The development of import factors was a popular topic at FCI’s conference. Despite the prominence of major players like BNP, Wells Fargo, and others in the import factor market, there exists a notable disparity in active engagement across the region.

Fehr said, “Interestingly, out of 109 import factors, only 19 are active in Asia, which significantly narrows down to about 5% of the total import factoring activities happening in the continent.”

Though this number is quite low and currently represents a challenge, it also provides an opportunity for growth. 

And there are ways to utilise existing strengths and resources to grow the import factor framework. 

Fehr said, “There is an opportunity to use your credit strengths, to use your understanding of the local credit market. Use available headroom, work with the insurer to build a proposition around import factors.”

The hamster wheel: The problem that keeps trade heads up at night

Sustainability is increasingly integral to trade finance, necessitating the incorporation of environmentally sound practices into core operations. 

A business cannot take into account all sustainability considerations in a short time frame during a deal.

Instead, Fehr said, “ You need to lobby third-party certification, third-party data, and build it into your hamster wheel.” 

Additionally, the push towards digital transformation is reshaping how trade finance operations are conducted. 

This transformation is yet another example of ‘the hamster wheel’, where processes need to be built into banks. Fehr said, “The hamster wheel only works if the client assesses your bank and the transaction flows through like a clockwork.”

As banks start to build these processes into their system, the industry can continue to thrive in the face of changing dynamics.

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According to the 2024 FCI Annual Review, the global factoring industry has a 8.4% 20 year- compound annual rate of growth. This is an impressive growth rate, but importantly, there is still a significant chance for the industry to grow further.

What needs to happen for this to take place?

Deepesh Patel, Editor, Trade Finance Global, spoke to Kevin Day, CEO, Lendscape, at FCI’s 56^th Annual Meeting in Seoul to discuss some of these key trends and ideas. 

Impacting the world of receivables finance and factoring 

Lending is never an easy business, especially when there are numerous macroeconomic challenges. 

To try to create a more seamless process, Lendscape supplies software and technology to banks and non-banks around the world in support of their factoring, business discounting, asset-based lending (ABL), and supply chain finance businesses with the goal of enabling smarter lending. 

This is done by reducing the cost of lending, making lenders themselves more efficient by driving a more digital agenda and enabling lenders to expand their markets and to deliver critical funding to small and medium-sized enterprises (SMEs) – the backbone of the economy. 

With significant changes taking place in the wider asset-backed finance landscape, market participants face several headwinds. Historically, financial products in the commercial finance sector have been excellent products, enabling businesses to unlock their balance sheets and generate working capital. 

However, Day said, “As a marketplace, I think we tend to overcomplicate things. And I think what we can see is opportunities to, by using digitalisation, offer a much more simplified lending solution.” Increasing simplicity expands the growth potential and enables lenders to support the market. 

Addressing key challenges and macro trends within the invoice finance industry 

Lendscape CONNECT seeks to connect the dots between the various technologies in the space, including data extraction technology to take data out of clients’ enterprise resource planning (ERP) and accounting software, for solutions for tracking and monitoring detailed shadow ledgers. 

Day said, “Essentially, we take that data from the accounting software, bring it into the lender’s environment to normalise it, effectively taking data and converting it into information.”

The new system automates borrowing-based calculations by using data to determine the amount of money that can be lent. This process happens without human intervention, providing SMEs with a hands-free experience.

For lenders, it maintains control over the assets while offering a more efficient and user-friendly service to borrowers.

This type of technology fits in directly with FCI’s focus of growing international trade by supporting new and innovative projects.

Day said, “When a client raises an invoice, and it is electronically sent to and received by the lender, it can be integrated into the FCI factoring system. The whole thing can become a big digital ecosystem.”

Linking technology and education: Adapting products to address the needs of emerging markets 

With the conference taking place in South Korea at the heart of ASEAN, the development and growth of factoring as an industry across different geographies was a key theme. 

One of the main challenges identified is the difference usage of factoring in the West versus its usage in emerging and developing markets.

In this respect, Lendscape is well positioned to either address the unique character of this slightly different segment and/or develop products that are better suited to the factoring industry in these fast-growing developing and emerging economies. 

One priority for Lendscape in this respect is sharing knowledge. With extensive amounts of knowledge and best practices established over many years in developed markets, Day said, “I think it is our duty to actually make that knowledge available to the developing markets. Why learn those hard lessons that have been learned previously?” 

As a strong advocate of training, Lendscape sponsors the education programme of FCI. Moreover, in terms of actually making technology available, there are important accompanying factors to share, such as the presentation of the built-in knowledge and expertise that develops around such utilities. 

Day said, “And so I think by making that technology available, best practice, training, and education, I think we can actually help all of these markets to develop and grow successfully.” 

This educational role through FCI Academy for a technology company such as Lendscape is important, as it provides a return on investment. Day said, “I think when you talk about education, you talk about investing in people. And by investing in people, effectively, you are building up your human capital, and that then actually supports your business as it grows. What we get out of it, really, is the fact that it makes our lives easier.” 

As the technology is built around best practices, the more organisations that adopt best practices, and more operations become more effective and streamlined. 

Day said, “So effectively, we are also helping ourselves. But of course, as well, we want to see this product grow. We believe in this financial product. We think it is really good for supporting SMEs, and we want to make sure that we are at the heart of actually driving forward and helping organisations push and encourage and nurture this business.” 

Key growth trends in the receivables and supply chain finance industry 

The landscape of global market growth is showing some impressive trends, particularly in emerging economies. Day said, “Obviously, it’s from a small base, but the growth is very dramatic, especially in Africa and other emerging markets.” This growth contrasts with the patterns observed in developed markets where many products have reached a saturation point in terms of adoption.

In developed economies, the dynamics are shifting as traditional financial institutions face increasing competition from fintech companies. This challenge has spurred innovation, prompting organisations to reassess and revitalise their offerings. 

Day said, “Organisations are looking at how they can repackage and reposition their offerings to make the borrowing experience much easier for the end user.”

Such strategic adjustments are essential for transitioning certain financial products from niche alternatives into mainstream lending solutions, which are poised to significantly support business development and economic growth.

The post VIDEO | Kevin Day on the launch of Lendscape CONNECT appeared first on Trade Finance Global.

In the first quarter of this year, Korea’s exports to the United States exceeded those to China for the first time since the second quarter of 2003.

Korea’s exports to the U.S. are anticipated to continue their strong performance, supported by foreign direct investment (FDI) in key manufacturing sectors, including the semiconductor industry. 

Despite the positive outlook in the short term, the analysis from the Bank of Korea suggests that there are several risks over a medium to long-term horizon (two to ten years), such as potential trade sanctions.

On 18 April, the Bank of Korea published a report titled “Assessment and Prospects for Changes in the Structure of Korea’s Exports to the United States.” The report noted that since 2020, the proportion of Korea’s exports to the U.S. in relation to its total exports has been increasing steadily. This trend culminated in the first quarter of this year, when exports to the United States surpassed those to other regions for the first time since 2003.

The robust growth in Korea’s exports to the U.S. has been linked to the agile responses of Korean firms to the strong U.S. consumption demand and their increased investments, spurred by policies such as the Inflation Reduction Act (IRA). 

Since 2020, the characteristics of Korean exports to the U.S. have included stronger ties with U.S. domestic demand, an increase in the share and variety of intermediate goods focused on emerging industries, and a stable presence of consumer goods, which have consistently accounted for 30% of exports.

The Bank of Korea predicts that the upward trajectory of Korean exports to the U.S. will persist, driven by active U.S. consumption and investment. This dynamic benefits not only Korea’s direct exports to the U.S. but also its indirect exports through China and ASEAN countries. 

Furthermore, increased FDI in manufacturing is likely to boost exports to host countries, with the impact of Korean production in the U.S. on exports to the U.S. having risen since 2020.

However, over the medium to long term, the influence of Korean companies’ FDI in the U.S. on exports to the U.S. is expected to diminish. The U.S. industrial structure, with its high proportion of domestic intermediate goods and high production costs, poses challenges for Korean SMEs trying to enter the U.S. market, even as larger Korean corporations expand their FDI.

The possibility of U.S. trade sanctions against Korea is also highlighted in the report, given Korea’s significant trade surplus with the United States. Nam Seok-mo, head of the international trade team at the Bank of Korea, said, “In the past, the United States has imposed various trade sanctions on Korea when the country’s trade deficit with the United States widened or when U.S. public opinion changed in favor of protecting America’s own industries. In particular, the Trump administration in 2017 and 2018 pushed for renegotiation of the Korea-U.S. free trade agreement and implemented safeguards.”

To mitigate potential trade pressures from the U.S., the report suggests increasing imports of energy and agricultural products from the United States. This strategy could not only alleviate trade tensions but also enhance Korea’s energy and food security while reducing consumer prices within Korea.

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South Korea, the world’s 13th largest economy, is experiencing a surge in import demand, signalling increased opportunities for premium British goods and services. Concurrently, the two nations will declare a historic £21 billion Korean investment in the UK’s green energy and infrastructure, expected to generate over 1,500 specialised jobs.

Tomorrow, 22 November, the UK’s Business and Trade Secretary, Kemi Badenoch, will formally initiate negotiations for a revised trade deal with South Korea, aiming to bolster trade and reinforce ties with this pivotal ally. 

This initiative coincides with Korean companies pledging £21 billion in investments across the UK, focusing on renewable energy and infrastructure, thereby fostering over 1500 expert jobs.

South Korea, recognised as the 13th largest global economy, is poised for a substantial increase in import demand. With approximately 45 million middle-class consumers and an import market projected to expand by 45% by 2035, South Korea offers significant prospects for UK businesses.

Both the UK and South Korea are advanced economies with substantial digital sectors. However, the current trade agreement, over a decade old, lacks digital provisions reflective of today’s economic landscape. 

With around 80% of UK’s service exports to Korea being digital in 2021, modern digital provisions could unlock considerable opportunities for British businesses.

Since the existing trade agreement with South Korea was established in 2011, the UK’s trade with South Korea has more than doubled. An enhanced trade deal is anticipated to further elevate the £16 billion annual trading relationship, supporting jobs and livelihoods throughout the UK.

Business and Trade Secretary Kemi Badenoch stated ahead of the launch, “The government is upgrading our trade deal with South Korea to ensure that our trading relationship plays to the UK’s strengths as an advanced, high-tech economy. This refreshed, modernised deal will boost our world-leading services sector, while also creating new opportunities for UK exports such as in our world leading food and luxury goods sectors.”

The negotiations will be launched by the Business and Trade Secretary alongside Korean Minister for Trade, Industry and Energy Bang Moon Kyu at the UK-Korea Business Forum at Mansion House, marking Korean president Yoon Suk Yeol’s state visit.

At this event, the UK and Korea will also announce a record £21 billion of investments in green energy and infrastructure projects in the UK. This new investment, which significantly exceeds Korea’s 2021 foreign direct investment of £1.9 billion in the UK, demonstrates the robustness of the UK-South Korea trade relationship. It is expected to create over 1,500 skilled jobs and spur innovation nationwide.

The investments include:

• A £9.7 billion investment by the Republic of Korea Sovereign Wealth Fund in UK renewables, green infrastructure, and waste management over the next decade;
• £2 billion from Shinhan Financial Group for renewable energy and infrastructure projects in the UK;
• £650 million by SeAH Wind for a cutting-edge monopile manufacturing facility in Teesside Freeport, creating 750 jobs by 2030;
• £150 million by SPC for establishing 200 cafés across the UK, generating 400 jobs and engaging 200 local businesses in the supply chain;
• £90 million by Hanwha Phasor for a new European Space Research and Development Hub in Cambridge, creating 100 skilled jobs.

Minister for Investment Lord Johnson said, “Just weeks after my hugely productive trip to Seoul, I’m thrilled to see Korean investors committing £21bn to exciting new projects which will create jobs and spur economic growth across the UK. I’m hugely focused on securing greater partnerships with sovereign wealth funds, and so I greatly welcome the Korea Investment Corporation’s £9.7bn for renewable energy, fintech and life sciences – three sectors the UK is leading the world in. 

As we will see at next week’s Global Investment Summit, the UK is one of the best places in the world to invest thanks to the huge growth and innovation that we are fostering in our science and tech sectors. The investments secured today are yet further proof of that and how we continue to strengthen our trade and investment ties with South Korea and the wider Asia Pacific region.”

British brands are flourishing in the Korean market, with leading UK technology and green energy companies announcing over £2.5 billion in business deals with South Korea. Bentley and Diageo are also expected to confirm over £200 million worth of contracts in the country this year, supported by the Department of Business and Trade.

The proposed deal aims to benefit nearly 7,000 UK businesses exporting to Korea, 85% of which are Small and Medium Enterprises (SMEs). The new agreement is likely to include measures supporting smaller businesses, such as digitising and simplifying customs procedures.

The UK is also seeking to establish simple and progressive rules of origin, ensuring continuity and long-term stability while enabling as many businesses as possible to benefit from reduced or zero tariffs on exports to South Korea.

Lord Mayor of the City of London, Professor Michael Mainelli, commented, “It is an honour that this exciting trade communique between two modern economies has been announced here at the Mansion House. The Republic of Korea is a rapidly growing economy with significantly advanced digital sectors.

“Financial services is the second largest services trade exported from the UK to the Republic of Korea and an upgraded trade deal can further bolster opportunities across Britain. Additionally, as one of the world’s largest services exporters, this agreement will be key to the UK’s digital transformation ambitions, not just for large firms and conglomerates but also for small and medium sized enterprises seeking to benefit from streamlined and digitalised procedures with customers and businesses in the Republic of Korea.”

Chief Executive Officer at TheCityUK Miles Celic said, “This is a significant step in modernising, strengthening and deepening our partnership with South Korea. It is an opportunity to secure strong digital trade provisions, fostering more robust collaboration between our nations in the exciting growth technologies of tomorrow.”

Korea, a top-three global producer of essential goods such as semiconductors and ships, plays a crucial role in global supply chains. Strengthening trade links with dynamic Indo-Pacific economies like Korea could help mitigate future economic shocks and complements the UK’s engagement in the region, including joining the CPTPP trading group.

The UK is already a prime destination for Korean green investment, with Korean companies leveraging UK expertise in offshore wind, aiming to construct the world’s largest offshore wind farm by 2030. Many engineering contracts for Korean offshore wind projects have been awarded to UK firms, and enhancing the trade deal could further solidify this partnership.

The announcement precedes the Global Investment Summit, where the UK will host approximately 200 of the world’s leading investors. The summit will highlight the UK as an ideal investment destination, driving significant new investment into every sector of the economy, particularly in science and technology.

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Britain and South Korea have decided to prolong the duration of minimal or zero tariffs on mutual trade involving goods with components from the European Union, according to an announcement from the British government on Monday. This move is particularly beneficial for the automotive sector.

If the two-year extension had not been granted, UK firms would have been subject to elevated tariffs starting from 1 January for products manufactured with EU parts, based on so-called rules of origin, as well as on goods transported through the EU.

The imposition of any tariffs might have adversely impacted sectors such as food and beverage producers and car manufacturers, potentially resulting in increased prices for items like electric vehicles.

The yearly trade between the UK and South Korea has a value of £18 billion ($21.9 billion), and negotiations for a new trade agreement are scheduled to commence later this year. The existing accord was carried over from the UK’s prior EU membership.

Britain’s minister for international trade, Nigel Huddleston, said extending the tariff-free period would help provide much-needed 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.

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