Key exports including semiconductors, electric vehicles and auto parts to gain market access; fast-track customs clearance and online IP protections introduced; deal lays groundwork for cooperation in supply chains, energy, minerals, AI and biotech

Yeo Han-koo, South Korea's chief trade negotiator at the Ministry of Trade, Industry and Energy [Ministry of Trade, Industry and Energy]
Yeo Han-koo, South Korea's chief trade negotiator at the Ministry of Trade, Industry and Energy [Ministry of Trade, Industry and Energy]

South Korea has concluded a Comprehensive Economic Partnership Agreement with Serbia, marking the first free trade deal Seoul has struck with any country in the Balkan Peninsula.

The agreement is expected to benefit South Korea's automotive industry, K-food exporters, pharmaceutical companies and defense firms, while also helping stabilize supply chains for the country's advanced industries.

Yeo Han-koo, South Korea's chief trade negotiator at the Ministry of Trade, Industry and Energy, officially declared the conclusion of negotiations with Serbian Minister of Internal and Foreign Trade Jagoda Lazarevic in Belgrade on Thursday local time, and the two sides signed a joint declaration.

A CEPA goes beyond a conventional free trade agreement by combining tariff reductions and market-opening measures with broader economic cooperation covering areas such as supply chains.

Serbia is a small country of 7 million people but has long been regarded as the dominant power in the Balkans.

Situated at the heart of the Balkan Peninsula and serving as the central state of the former Yugoslav federation — linking the EU, the Middle East and Greece — Serbia carries significant geopolitical weight and is rich in critical minerals including lithium, copper and zinc, making it a strong candidate for supply chain cooperation.

Rising production costs at major manufacturing hubs in Eastern Europe have drawn fresh attention to Serbia as a new destination for manufacturing investment and cooperation. That backdrop prompted Seoul to pursue CEPA negotiations with Belgrade following a South Korea-Serbia prime ministerial summit in 2023.

Under the deal, the two countries agreed to eliminate tariffs on 90.2 percent of all product categories, covering more than 96 percent of total import value — a liberalization rate that exceeds the China-Serbia FTA, which took effect in 2024 and covered 95 percent of imports by value.

Particularly notable is Serbia's commitment to scrap tariffs of up to 25 percent on semiconductors and electronics. Serbia is not a member of the World Trade Organization's Information Technology Agreement, meaning South Korean advanced products had faced steep duties; their removal is expected to sharply improve price competitiveness.

The deal also opens Serbia's market to electric and hybrid vehicles and immediately eliminates tariffs on all automotive parts, a significant gain for South Korea's auto industry.

Tariff barriers will also fall for K-food products — including ramyun, seasoned dried seaweed, ginseng and coffee mix — as well as K-beauty items such as color cosmetics and skincare, along with pharmaceuticals and defense-related goods.

The agreement is also expected to make a substantial contribution to stabilizing supply chains for South Korea's advanced industries.

Tariffs on Serbian lithium, cobalt, nickel, graphite and rare earth elements — raw materials essential for secondary batteries and semiconductors — will be eliminated immediately or within five years.

In exchange, South Korea agreed to eliminate tariffs on animal feed and processing corn, which together account for more than 40 percent of Serbia's exports to South Korea — immediately for feed corn and over 10 years for processing corn. Market opening for sensitive South Korean agricultural products, including rice, natural honey, fruits such as strawberries and berries, meat and dairy, was kept to a minimum to achieve a balanced outcome, the Ministry of Trade, Industry and Energy said.

Business conditions will also improve significantly. The deal introduces fast-track customs clearance rules requiring general imports to clear within 48 hours of arrival and express shipments within six hours. It also strengthens intellectual property protections for South Korean companies, including measures to block websites that infringe on IP rights online.

Economic cooperation will extend well beyond trade to encompass future industries including AI, healthcare and life sciences.

"The conclusion of the South Korea-Serbia CEPA will serve as a springboard for taking our economic partnership with Serbia — a key partner in the Western Balkans — to the next level," Yeo said. "In a rapidly shifting trade environment marked by the spread of protectionism and the restructuring of global supply chains, the significance of this deal lies not only in market opening but in the fact that the two countries have together built an economic cooperation platform spanning supply chains, energy and minerals, and future industries such as AI and biotech."

He added that Seoul would push ahead with follow-up procedures without delay so that businesses and citizens in both countries could feel the benefits of the agreement as soon as possible.


oskymoon@heraldcorp.com