As the United Kingdom officially notified the European Union on March 29 of its intention to leave the common market, South Korea is quick in preparing to start negotiations with the UK to conclude a bilateral FTA. The UK also chimed in by underscoring the importance of a bilateral FTA to sustain and expand bilateral trade. Article 50 of the Lisbon Treaty will validate the UK departure as of March 29, 2019 when two-year negotiations between the UK and the EU end.

Surely, given the magnitude of the bilateral trade (the UK is Korea’s 15th-largest export market and fifth largest source of investment), the two countries cannot afford to have any interruption in the flow of goods and services on March 29, 2019. Hence, both Seoul and London are echoing a strong willingness to conclude an FTA without delay. But there are tricky curves and treacherous paths in the road to the Korea-UK FTA. This particular FTA is bilateral in form but “triangular” in substance.

Here are some things to consider. Many provisions to be included in a prospective Seoul-London FTA will have mirror or corresponding provisions in the present Korea-EU FTA. Terms in the Korea-EU FTA will similarly appear in the bilateral FTA mutatis mutandis. After all, the Europeans seem to share similar perceptions and concerns when it comes to regulating trade with Korea. Now, the Korea-EU FTA is waiting for its own amendment negotiation: It was last July when Korea and the EU reached consensus to explore amendment of the now six-year old trade pact.

In other words, the next two years will probably see parallel negotiations of a Korea-UK pact and a Korea-EU amendment. This further means the UK will look at Korea-EU development with great interest and Brussels will follow every step of Korea-UK talks. In effect, the two sets of negotiations for the next two years are interlocked.

Between London and Brussels, everything indicates that their own separation negotiations will be anything but easy. Since the March 29 official notification, both sides have been digging their heels in deeper and harder. As of now, no one knows for sure what kind of relationship the UK and the EU will agree to form when the two-year negotiation period runs out. All we know now is that this divorce negotiation will probably dwarf any previous negotiations in complexity and bitterness. In any event, what comes out of the UK-EU separation package will then affect Korea-UK and Korea-EU (minus UK) FTAs in two years.

So, what awaits us is a triangular negotiation in a short time frame. Multiple negotiations with several countries are common. But a simultaneous, triangular bargaining is a novel concept. Certainly it has not been in Korea’s playbook.

Since the FTA in 2011, Korea and the EU have had some important outstanding issues in the trade front: Korea’s domestic service market regulation and non-tariff barriers have been the EU’s major concerns, whereas the EU’s own import regulations in 28 different member countries have posed challenges to Korean exporters. As the EU finalizes its investment policy, agreeing to an investment chapter to be added to the present FTA to replace existing bilateral investment agreements between Korea and individual member states has become new homework for the two sides. None of them are easy to deal with. In all these outstanding issues, the UK will now have its own voice and agenda. So will Korea vis-a-vis the UK. The upcoming triangular negotiations will be quite challenging, to say the least, for the three sides involved.

The strong willingness for a bilateral FTA expressed by Korea and the UK in the past week is a good sign. While there is certainly a long way to go with unexpected twists, with such strong determination the two countries will be able to find a way to overcome the challenges and difficulties from the first ever triangular interaction. Hopefully, a new agreement may breathe fresh air into the already vibrant bilateral trade between the two countries.


By Lee Jae-min

Lee Jae-min is a professor of law at Seoul National University. He can be reached at jaemin@snu.ac.kr. -- Ed.