Arab-Korean Economic Breakthrough: UAE’s First Free Trade Pact

The UAE President, Sheikh Mohamed bin Zayed Al Nahyan, embarked on a momentous two-day state visit to South Korea—the first by a UAE president. This visit signifies a new era of economic collaboration and strategic partnership between the two nations. Here are the highlights from the first day:

High-Level Business Engagements and Investment Commitments

Upon arrival, President Sheikh Mohamed was honored with an escort of four Air Force F-15 fighter jets as his plane entered South Korea’s air defense identification zone. This grand gesture set the tone for a series of high-level engagements with major Korean business delegations, including leaders from Samsung, SK, and Hyundai Motor. Discussions centered around economic growth, innovative ventures, and overcoming industry challenges.

President Sheikh Mohamed emphasized the importance of joint projects and investments, highlighting that the UAE offers a conducive environment for foreign investments with robust infrastructure and favorable regulations. The agreements set to be signed during this visit will open new avenues for collaboration, particularly in energy, defense, and investment sectors.

On the second day, President Sheikh Mohamed engaged with key business figures in Korea, including Samsung Electronics Chairman Jay Y. Lee, Chey Tae-won of SK Group, and E.S. Chung of Hyundai Motor Group. These meetings further cemented the bilateral relations, which are experiencing growing momentum in various fields.

During President Yoon Suk Yeol’s state visit to the UAE in January 2023, Sheikh Mohamed pledged a substantial $30 billion investment in Korean companies, underscoring the deepening economic ties between the two nations.

Comprehensive Economic Partnership Agreement (CEPA) and Trade Relations

A significant milestone of the visit was the signing of the Comprehensive Economic Partnership Agreement (CEPA) between the UAE and South Korea. This agreement marks South Korea’s first free trade pact with an Arab nation. Under the CEPA, both nations will eliminate tariffs on more than 90% of imports over time. Notably, the UAE will gradually abolish import duties on automobiles over the next decade, while South Korea will remove tariffs on crude oil imports. This agreement is expected to significantly boost trade and economic relations between the two countries.

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The volume of the UAE’s non-oil foreign trade with Korea reached Dh19.4 billion in 2023. The UAE’s investments in South Korea stood at $578 million, while South Korea’s investments in the UAE reached $2.2 billion by the end of 2022. These figures illustrate the robust economic exchanges and the significant potential for future growth and collaboration.

Bilateral Talks and Strategic Partnerships

The visit included closed-door meetings focused on enhancing partnerships in advanced technology sectors such as semiconductors and renewable energy. Hyundai Vice Chairman Chung Ki-sun expressed optimism about further cooperation in shipbuilding, construction machinery, and eco-friendly energy sectors. Other conglomerates, including Hanwha and CJ Group, echoed similar sentiments, looking forward to bolstering economic and cultural exchanges. Defense companies like LIG Nex1 are anticipated to benefit from these enhanced relations amid regional geopolitical uncertainties.

Conclusion

President Sheikh Mohamed bin Zayed Al Nahyan’s historic visit to South Korea marks a pivotal moment in UAE-South Korea relations. The agreements and partnerships forged during this visit lay the groundwork for a new era of economic collaboration, benefiting both nations. As the UAE and South Korea continue to strengthen their ties, the prospects for mutual growth and development are brighter than ever.