The South Korean government has requested the United Kingdom to apply an exemption to sanctions related to the shipping and insurance services for Russian liquefied natural gas (LNG). It also urged improvements to import regulations that restrict the entry of South Korean steel into the UK market.
The Ministry of Trade, Industry and Energy announced that Park Jeong-sung, head of the Trade Negotiation Headquarters, held a video conference on September 11 with Jonathan Reynolds, the new UK Minister for Business and Trade, to discuss trade issues between the two countries.
During the meeting, Park expressed concerns about the impact of the UK's ban on shipping and insurance services for Russian LNG on South Korea's LNG supply and energy security. He highlighted that UK insurers play a significant role in the reinsurance of Russian LNG imports.
Park also referenced the European Union's (EU) announcement on July 23, which included an exemption for South Korea's imports of Russian LNG, and requested that the UK consider similar exemptions for existing contracts.
According to Korea Gas Corporation, South Korea imports 1.5 million tons of LNG annually under a long-term contract with the Russian Sakhalin-2 project. While domestic insurers provide primary insurance for transport vessels, EU and UK insurers participate in reinsurance to spread large risks. Even though the EU has recognized exemptions for Sakhalin-2 LNG services to South Korea until March 31, 2028, separate measures from the UK are still necessary.
Previously, the government indicated that restrictions on related insurance services could disrupt the import of approximately 2 million tons of LNG from remaining contracts, valued at 1.75 trillion won. Sakhalin-2 LNG is crucial for winter supply, taking about four days for one-way transport to South Korea.
The UK government’s guidelines allow for exemptions under certain conditions for LNG contracts signed before June 17 of last year until January 1 of next year. South Korea's request aims to secure sanctions exemptions to fulfill long-term contracts even after the existing grace period.
In the steel sector, Park conveyed concerns from domestic industries, stating that the UK's new steel measures, implemented since July, have restricted access for South Korean steel products to the UK market. He called for prompt improvements, emphasizing the need to consider the high level of market openness and stable trade relations maintained through the World Trade Organization (WTO) and the Free Trade Agreement (FTA) between South Korea and the UK.
Additionally, both sides agreed to closely cooperate to expedite the signing and implementation of the improved Korea-UK FTA, which was finalized in December of last year. The improvement agreement includes relaxed rules of origin and expanded access to service and procurement markets.
The Ministry of Trade expects that the improvement agreement will contribute to the expansion of market access and trade between businesses in both countries. Both parties committed to continuing communication to enhance cooperation and resolve trade issues amid uncertainties in the global trade environment.
* This article has been translated by AI.
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