The government said the deal will protect annual trade flows between the two countries, which were worth £14.6bn last year. That amounts to around 1 per cent of Britain’s total trade, and 2 per cent of that with the EU.
The UK has signed 12 other such continuity free trade agreements, aimed at replicating as far as possible the preferential access it has to non-EU countries via its membership of the bloc. Switzerland accounts for Britain’s biggest continuity agreement so far, with trade between the two standing at £32.1bn in 2017.
Including the deal with South Korea, the 13 accords protect trade totalling £89bn, the government said. That is a fraction of the £634bn in export and import flows between Britain and its largest trading partner, the EU.
Yoo Myung-Hee, the Korean trade minister, said the latest agreement will “remove much Brexit uncertainty” from her country’s relationship with the UK.
South Korea is a world leader in electronics, steel and cars, and its exports to the UK reached £5.2bn last year. The country exports mostly cars and ships to Britain, while it imports crude oil, cars, ceramics and whisky.
While Britain is still part of the EU, it is not able to negotiate its own trade deals, relying on the EU’s agreements instead. But once it leaves the bloc, it will be able to do so.
A trade deal with the US is likely to be high on the agenda. As a single country, it is the top buyer of UK goods and services, taking in almost a fifth of British exports, even though the EU doesn’t have a trade agreement with Washington.
But the EU buys more than twice that amount from Britain, and a trade deal will be required to come close to the current frictionless trade.
Britain is working on continuity agreements with a host of other countries ahead of the 31 October Brexit deadline. But many discussions have stalled over the uncertainty about if and when Brexit will happen. For example, the government has already said the deal with Turkey, which accounts for 1.4 per cent of total UK trade, will not be signed in time.