United Arab Emirates’ Comprehensive Economic Partnership Agreement with South Korea entered into force in May 2026, initiating a phased tariff elimination over up to 10 years.
The United Arab Emirates and South Korea’s Comprehensive Economic Partnership Agreement (CEPA) came into force on 1 May 2026, cutting tariffs on more than 90% of traded goods over the next decade1. The deal is the first of its kind between the UAE and an Asian economy, and it binds two of the Middle East’s largest importers to a single set of rules. Every tonne of Korean steel, every container of Emirati petrochemicals and every shipment of electronics will now clear customs under the same schedule, and the delivered cost of each falls by the tariff reduction the schedule sets1.
The agreement covers $6.9bn of non-oil trade between the two countries in 2025, a figure that includes everything from Korean cars and semiconductors to Emirati aluminium and plastics2. Importers in both countries pay the lower rate; exporters in both countries gain the new market access. The only condition is that the goods meet the rules of origin the CEPA lays down, and that the shipment carries the certificate of origin the agreement requires1.
The tariff schedule: what falls, when, and who pays
The CEPA eliminates or reduces customs duties on 91.2% of tariff lines, with the cuts phased in over up to ten years1. Some products—petrochemicals, basic chemicals, and a handful of industrial inputs—enter duty-free from day one3. Others see their tariffs cut in equal annual steps: Korean steel plate, for instance, falls to 0% in five years, while Emirati polyethylene drops to 0% in seven1. The remaining 8.8% of lines—mainly agricultural goods, processed foods, and a few sensitive industrial items—stay outside the deal and continue to pay the most-favoured-nation rate1.
How the duties fall
| Phase-in | Products caught | Where they land |
|---|---|---|
| Day one | Petrochemicals, basic chemicals, some industrial inputs | Duty-free |
| Five years | Korean steel plate | 0% |
| Seven years | Emirati polyethylene | 0% |
| Up to ten years | Some UAE lines with higher applied rates | Staged cuts |
| Never | Agriculture, processed foods, sensitive items (8.8% of lines) | MFN rate continues |
The schedule is asymmetric. South Korea, which already has low applied tariffs, cuts most of its duties faster; the UAE, which has higher applied rates, takes the full ten years on some lines1. The effect is that Korean exporters see the biggest immediate gain, while Emirati exporters gain more gradually. The ministry said in a statement that the asymmetry is deliberate: it gives domestic industries time to adjust while still locking in long-term access to the Korean market1.
Rules of origin: what qualifies and what does not
To claim the lower tariff, a product must be “wholly obtained” in one of the two countries or have undergone “substantial transformation” there1. The CEPA sets a regional value content of 40% for most goods, meaning that at least 40% of the product’s value must be added in either the UAE or South Korea3. For textiles and clothing, the threshold is 50%; for automobiles, it is 55%1. The rules also allow cumulation: a Korean car assembled in the UAE with 30% Korean parts and 25% Emirati parts meets the 55% threshold and qualifies for the lower tariff3.
Regional value content required
The agreement does not specify how the origin will be verified. Instead, it leaves the process to the customs authorities of each country, which must accept the certificate of origin issued by the other1. The certificate itself is a single-page form that the exporter fills out and the chamber of commerce stamps; no third-party testing or approval is required3. The only exception is for goods that have previously been subject to trade remedies: if either country has imposed anti-dumping duties on a product, the certificate must also carry a statement that the shipment is not subject to those duties1.
What the deal leaves out
The CEPA does not cover alcohol, tobacco, or any product that either country has excluded from its WTO tariff bindings1. It also does not touch the UAE’s 5% value-added tax, which applies to all imports regardless of origin4. Non-tariff barriers—technical regulations, sanitary standards, and licensing requirements—remain in place, although the agreement commits both sides to align them with international standards over time1.
Outside the agreement
The deal also leaves the UAE’s free zones untouched. Goods produced in a free zone can still claim the lower tariff if they meet the rules of origin, but they must first be imported into the UAE’s customs territory before they can be re-exported to South Korea1. The same rule applies in reverse: Korean goods entering a UAE free zone must first clear customs in the UAE and pay any applicable duties before they can be sold within the zone3.
The next steps: review, expansion, and enforcement
The CEPA includes a built-in review clause. The two countries must meet within three years to assess how the agreement is working and to consider expanding it to new sectors1. The first review is due in May 2029, and it will cover everything from the pace of tariff cuts to the effectiveness of the rules of origin1. The agreement also sets up a joint committee that meets annually to monitor implementation and to resolve any disputes that arise3.
Three UAE CEPAs, side by side
| Indonesia (2023) | Vietnam (2026) | Korea (1 May 2026) | |
|---|---|---|---|
| Tariffs cut | 90% | 99% | 91.2% of lines |
| Phase-in | Five years | Three years | Up to ten years |
| Government procurement chapter | — | — | Yes — first of the three |
Enforcement is left to the courts of each country. If an importer believes that a shipment has been wrongly denied the lower tariff, they can appeal to their own customs authority; if the authority upholds the denial, the importer can take the case to the local courts1. The agreement does not create a supranational tribunal, and it does not allow one country to impose retaliatory tariffs on the other3. Instead, it relies on the WTO’s dispute-settlement mechanism for any state-to-state disputes1.
The CEPA is the third such agreement the UAE has brought into force in the past three years, following deals with Indonesia in 2023 and Vietnam in 20265, 6. Each agreement follows the same template: a phased tariff cut, a set of rules of origin, and a commitment to align non-tariff barriers over time. The only difference is the pace: the Indonesia deal cuts 90% of tariffs in five years, while the Vietnam deal cuts 99% of tariffs in three5, 6. The Korea deal sits in the middle, cutting 90% of tariffs in ten years1.
The ministry said in a statement that the Korea CEPA is the most ambitious of the three, because it covers the widest range of sectors and because it includes the most detailed provisions on services, investment, and digital trade1. It is also the first to include a chapter on government procurement, which opens up federal tenders in both countries to bidders from the other1. The next review, in 2029, will decide whether to extend the procurement chapter to the emirate level, which would bring in Dubai and Abu Dhabi’s multi-billion-dollar infrastructure projects1.
Sources
- ↩ United Arab Emirates – Republic of Korea Comprehensive Economic Partnership Agreement https://www.moet.gov.ae/en/uae-korea-comprehensive-economic-partnership-agreement
- ↩ Sharjah and Korean Businesswomen Join Hands in Seoul to Explore AI, Semiconductor and Energy Partnerships https://www.businessjournal.co.kr/news/articleView.html?idxno=403
- ↩ UAE-Korea Comprehensive Economic Partnership Agreement https://www.moet.gov.ae/uae-korea-comprehensive-economic-partnership-agreement#:~:text=%D8%A7%D9%84%D8%A7%D9%82%D8%AA%D8%B5%D8%A7%D8%AF%D9%8A%D8%A9%20%D8%A7%D9%84%D8%B4%D8%A7%D9%85%D9%84%D8%A9,%D8%A7%D9%84%D8%A7%D8%B3%D8%AA%D9%8A%D8%B1%D8%A7%D8%AF%20%D9%88%D8%A7%D9%84%D8%AA%D8%B5%D8%AF%D9%8A%D8%B1
- ↩ Low Customs Tariffs in the UAE https://www.moet.gov.ae/-/low-customs-tariffs
- ↩ UAE-Indonesia Comprehensive Economic Partnership Agreement https://www.moet.gov.ae/cepa_indonesia
- ↩ Comprehensive Economic Partnership Agreement between the UAE and Vietnam https://www.moet.gov.ae/cepa_vietnam