This year marks the 10th anniversary of the EU-South Korea Free Trade Agreement (FTA), which was provisionally in place since 2011 and formally ratified in 2015. As with any free trade agreement, this one aims to further liberalise trade between South Korea and the EU by eliminating or reducing customs duties on industrial goods and agricultural products. For example, South Korea’s average tariff rate was 8pc but the FTA removed all tariffs on industrial goods heading into South Korea within the first five years of its implementation.
Fundamentally, the FTA has made it easier and better for Irish and European businesses trading in South Korea. This means Irish exporters under the FTA won’t need to pay the customs duties, which vary depending on items and products gaining a price advantage or cost benefit.
One of my main remits is to help Enterprise Ireland clients to enter the Korean market, which is the fourth largest in Asia, and also to support existing clients in scaling their exports. I provide market research and advisory support to help formulate market entry and scale strategy, make introductions to Korean buyers and partners, and introduce innovative Irish solutions and capabilities to potential Korean partners and stakeholders.
The FTA has been very beneficial in making this happen as it also addresses non-tariff barriers (NTBs) in key sectors such as pharmaceuticals, medical devices, automotive and more. This makes it easier for businesses to comply with the regulatory elements by recognising the other party’s standards or waiving certain regulatory or certification burdens.
A report by Copenhagen Economics finds that the EU-South Korea FTA had already resulted in an increase of €273m or 31pc in Irish exports to South Korea in 2015.
But it is important to note that the agreement doesn’t provide all the intended benefits automatically, so Irish businesses should attain approved exporter status and analyse how best it can use the FTA to save costs and minimise administrative burdens.
That said, there are a number of Irish businesses doing well in the Korean market, and they tend to share certain commonalities in that they are all highly innovative, have industry-leading technologies or solutions which fit the market, have trusted in-market partners, and put resources on the ground to serve customers and partners.
South Korea has strong ambitions to lead the biopharma industry, and Ireland’s expertise in this sector is widely recognised and highly regarded. Also, Ireland is South Korea’s sixth largest source of medical devices – and as digital health is an area where South Korea wishes to develop, Ireland can add strong value given its strong position and expertise in both this area and in innovative biotech.
The digital technology sector is another area where Ireland has strong potential in Korea. AR, VR, IoT-enabled solutions, system chips for sensors as well as data processing tech are actively sought after by Korean businesses – and both fintech and RegTech are also presenting opportunities for Irish firms.
Agri-machinery and agri-tech are the ones with strong potential as the South Korean government has been working to increase agricultural productivity, and Irish agri-machinery is well recognised and received by consumers in this country. In fact, the government’s push for smart farming is also in line with Ireland’s agri-tech offering.
There are many Irish companies doing well here at the moment, including Novaerus, Kastus, Ding, InnaLabs and Skillsoft, and in my opinion, the Irish advantage should be considered in the context of local markets as each market has comparative advantages and disadvantages.
Overall, the Irish businesses which are doing well in Korea invest time and resources and visit their partners and customers regularly. Obviously, travel has been difficult due to Covid-19, but in-person meetings and connections are still very important when it comes to building trust and relationships here. And although there is more acceptance among Korean businesses for initial virtual engagement than there may have been pre-Covid-19, this cannot replace the fundamental importance of in-person interaction.
However, going forward, I am hopeful that once the world opens up fully, there will be plenty of opportunities for Irish businesses in Korea.
Enterprise Ireland aims to boost the number of Irish businesses benefiting from the Free Trade Agreements with these countries. On Thursday, June 24, at 9am, Enterprise Ireland is hosting a webinar on Doing Business in South Korea, which will feature insights from Enterprise Ireland on how the EU-South Korea FTA can provide enhanced business opportunities for Irish businesses. The webinar brings together experts on the topic to provide knowledge and insights on key elements of the FTA, and to enable Irish businesses to make use of the FTA to its fullest in doing business in South Korea. Those interested in attending can register here or visit the Enterprise Ireland website – globalambition.ie.
Taewon Um is Director Korea at Enterprise Ireland