South Korea and the United Arab Emirates (UAE) strengthened their future-oriented cooperation in industry, trade and energy on Wednesday. During the presidential summit meeting, the two countries signed eight agreements, letters of investment intent and memoranda of understanding across various sectors.

Notable agreements include the Korea-UAE Comprehensive Economic Partnership Agreement (CEPA), a memorandum of understanding on carbon capture and storage cooperation and a strategic agreement on joint development of clean hydrogen production and introduction. The two countries also discussed expanding their joint oil stockpiling project and signed letters of intent to construct liquefied natural gas (LNG) carriers.

The South Korean government also plans to take follow-up measures to ensure the development of a future-oriented cooperative relationship with the UAE in fields such as nuclear power, carbon reduction, clean hydrogen, shipbuilding and petrochemicals, based on the achievements of Wednesday’s summit.

Why It Matters

The Korea-UAE CEPA marks the UAE as the first Arab nation to sign such an agreement with South Korea. The agreement will lift tariffs on over 90% of goods, including cars, auto parts and defense items, over the next 10 years, boosting trade and investment. UAE President Mohamed bin Zayed Al Nahyan reaffirmed his country’s commitment to invest $30 billion in South Korea, which will likely have a substantial impact on various sectors, including energy, technology and defense. 

The UAE is a strategic economic partner for South Korea in the Middle East, with bilateral trade reaching almost $21 billion in 2023. South Korean companies have played a crucial role in the UAE’s development projects, such as the $20 billion Barakah nuclear facility in Abu Dhabi. Moreover, the UAE signed a $3.5 billion deal to purchase the ROK’s Cheongung II mid-range surface-to-air missiles in Jan. 2022.

The UAE’s sovereign wealth fund, Mubadala Investment Company, and other companies plan to invest over $6 billion in South Korea, expanding the investment cooperation framework. Additionally, the Abu Dhabi National Oil Company signed a letter of intent with Samsung Heavy Industries and Hanwha Ocean to build at least six LNG carriers worth $1.5 billion. These investments, along with increased cooperation in crude oil storage and hydrogen projects, will likely boost South Korean shipping firms, which have faced intense competition from their Chinese competitors.