LONDON (Reuters) - A European Union-South Korea trade pact taking effect on Friday should give a 500 million pound boost to British exporters, a minister said on Thursday.
The pact, which will remove up to 97 percent of tariffs on trade between EU countries and South Korea, was approved by the South Korean parliament in May. It will bring “massive opportunities” for Britain, business minister Edward Davey told Reuters in a telephone interview.
Britain’s trade with South Korea is worth about 10 billion pounds a year, making it the second biggest exporter to South Korea among EU countries.
Main UK exports to South Korea include industrial machinery, pharmaceuticals, drinks and vehicles. Davey sees opportunities for British firms in advanced engineering, chemicals, creative industries and financial services, among others.
He called the agreement “absolutely central” to the government’s strategy of raising trade with emerging markets, with exports spurred by the weaker pound helping the economy at a time when public spending cuts are crimping domestic demand.
“We are urging UK firms to look towards Korea if they want to trade with the Far East. It’s a really good market to get a foothold into the Far East. Then you can jump off into more challenging markets, China and Japan and so on,” he said.
Supermarket chain Tesco and Standard Chartered bank are big investors in South Korea while more than 200 South Korean companies do business in Britain, including Samsung and LG Electronics.
Davey said he was optimistic the 27-nation EU would launch negotiations with Japan on a free trade treaty, despite reservations among some EU member states. Spurred by Japan’s earthquake, tsunami and nuclear crisis, EU leaders agreed in March to invite Japan to negotiate closer trade ties.
Concerns have grown in the EU about whether Japan’s government is committed to easing long-standing import barriers and restrictions on foreign bids for public works contracts.
EU ministers said last month Japan must prove it will open its doors to European goods and companies before the EU will start negotiations on a trade pact.
While Britain advocated opening negotiations with Japan, “there are other member states who don’t share that view,” Davey said. However, he said he was optimistic the EU would start negotiations. “The dossier hasn’t been opened yet formally but I think opinion is moving that way,” he said.
While Britain strongly backs EU free trade pacts with individual countries, it does not see such deals as a substitute for a new global trade agreement, Davey said. Long-running Doha trade liberalisation talks were “in difficulty (but) we still hope that something can come from those discussions.”
Britain and China, which aim to double two-way trade to $100 billion (62 billion pounds) by 2015, signed deals worth 1.4 billion pounds during Premier Wen Jiabao’s visit to London this week.
Editing by Peter Graff
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