In the News Teaching Activity: South Korea Agrees To Extend Free Trade With the UK (Oct 2023)

Britain and South Korea extend low or zero tariffs on their bilateral trade of products with parts from the European Union avoiding high tariffs on British businesses under so-called rules of origin.

Have a go at this free teaching activity, which includes a downloadable worksheet and suggested answers.

The agreement between Britain and South Korea provides a boost to the UK car industry. Without this extension, British businesses would have faced high tariffs from January on EU component-based exports, potentially affecting industries like food, drinks, and automakers, including electric cars. The extension supports the £18 billion per year trade between the two countries and precedes talks for a new trade deal later this year.

Tariff-free trade brings many benefits, so post-Brexit, the UK made a new free trade agreement with the EU called the Trade and Cooperation Agreement (TCA); the UK has also negotiated new trade deals with Australia, New Zealand and Japan.

In June 2023, the UK signed to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The government is also currently attempting to agree terms for a trade agreement with India. All these agreements help keep trade flowing.

Britain, South Korea agree to extend tariff-free trade for two years (Reuters)

Read the article and then answer the following questions.

1. What is ‘tariff-free trade’? Use a tariff model diagram to show the welfare gain from removing the tariff on a good.
2. Explain the difference between a free trade agreement and a single market.
3. Discuss the advantages and disadvantages for a country joining a trade agreement such as the CPTPP.