The United Arab Emirates (UAE) and South Korea have successfully concluded negotiations for a Comprehensive Economic Partnership Agreement (CEPA), a significant milestone in their burgeoning economic relationship. The announcement of this trade agreement reflects the growing trade and investment ties between the two nations.
In the first half of 2023, the non-oil bilateral trade between the UAE and South Korea reached $3bn, maintaining levels from the previous year but demonstrating a notable 21% increase compared to 2021. These impressive figures are a testament to the strengthening economic cooperation between the UAE, a key player in the Gulf region, and South Korea, a dynamic Asian economy.
One of the remarkable joint ventures between the two nations is the Barakah Power Plant in Abu Dhabi. The Korea Electric Power Corporation and a consortium of Korean companies successfully completed the construction of all four units of this $20bn nuclear power facility, which commenced operations in April 2023. This project plays a pivotal role in supporting the UAE's domestic electricity needs and exemplifies the potential for future collaborations between the two countries.
The discussions for the CEPA between the UAE and South Korea began in 2021, making South Korea one of the first countries to engage in such talks with the Gulf state. However, a few months later, South Korea also initiated Free Trade Agreement (FTA) negotiations with the Gulf Cooperation Council (GCC), a six-member bloc that includes the UAE.
Thani Al Zeyoudi, the UAE Minister of Foreign Trade, commented on the resumption of negotiations with South Korea, stating;
"We resumed talks with Korea earlier this year as we were both keen to conclude a deal and advance our respective economic agendas."
He also noted that the GCC FTA negotiations were ongoing, indicating the UAE's commitment to strengthening its economic ties on multiple fronts.
The trade ministry of South Korea expressed enthusiasm for the CEPA, stating that there were approximately 178 South Korean firms conducting business in the UAE as of 2022. The agreement is expected to provide increased stability for South Korean firms operating in the UAE and enhance the support available for South Korean companies seeking to expand their activities in the Middle East and North Africa.
The UAE has pursued a proactive strategy to diversify its economy from oil, engaging in CEPA negotiations with several nations, including former political rivals such as Israel and Turkey, as well as economic powerhouses like India and Indonesia. The UAE's approach has consistently emphasized separating politics from trade, as demonstrated by its commitment to continue trade with Israel despite ongoing geopolitical conflicts in the region.
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