In a significant development for bilateral relations, South Korea and the United Arab Emirates (UAE) signed a comprehensive trade agreement on May 29, 2024, aimed at substantially reducing import duties. The agreement was finalized during a summit held in Seoul, attended by UAE President Sheikh Mohamed bin Zayed Al Nahyan and South Korean President Yoon Suk Yeol.
Strengthening Economic and Strategic Partnerships
The summit, which follows President Yoon’s state visit to Abu Dhabi last year, highlighted the strong strategic partnership between the two countries, particularly in the fields of energy and defense. The ceremony included a traditional honor guard and an air force flypast, symbolizing the deepening ties.
A major highlight was the UAE reaffirming its commitment to invest $30 billion in South Korean industries. These investments will target sectors such as nuclear power, hydrogen, solar energy, and defense, providing a significant boost to South Korea’s technological and industrial landscape.
Key Trade and Investment Agreements
Central to the summit was the signing of a Comprehensive Economic Partnership Agreement (CEPA), initially agreed upon in October. Once ratified, this CEPA will eliminate all tariffs on South Korean arms exports, reflecting enhanced defense cooperation. Additionally, it outlines the gradual removal of tariffs on automobiles and crude oil imports over the next decade, eventually eliminating tariffs on over 90% of bilateral trade.
The Abu Dhabi National Oil Company also signed a letter of intent for a South Korean company to construct six LNG carriers valued at approximately $1.5 billion. This agreement exemplifies the expanding investment into South Korea’s future-focused sectors.
Engagement with Industry Leaders
During his visit, Sheikh Mohamed met with leaders of South Korea’s top conglomerates, including Jay Y. Lee of Samsung Electronics, SK Group Chairman Chey Tae-won, and Kim Dong-kwan of Hanwha Group. These discussions aimed at enhancing long-term cooperation in defense industries, aligning with South Korea’s goal to become a leading global defense exporter by 2027.
Global Defense Ambitions
South Korea has been expanding its defense sector, securing significant international contracts, notably with Poland, amid the regional security concerns driven by the conflict in Ukraine. This aligns with South Korea’s strategic objective to become one of the top global defense exporters.
Conclusion
The trade pact signed at the summit marks a transformative phase in South Korea-UAE relations. By reducing import duties and boosting investments, the agreement is set to drive economic growth and foster deeper cooperation between the two nations, strengthening their positions in the global economy and defense sectors.
Photo source: Google
Montel Kamau
Serrari Financial Analyst
29th May, 2024
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