Under the terms of the agreement, which takes effect in November 2007 and lasts for two years, KOFIC will allocate $200,000 to support print and advertising costs of UK films distributed in Korea.
In return, Korean films will receie the same level of support from the UK Film Council's Prints & Advertising Fund.
Through their existing film distribution support schemes, the two councils will both select a mimimum of four films from the other country, over the two years of the agreement.
'Our hope is that this will build audiences and box office potential in each other's markets,' said UK Film Council director, international, Clare Wise. 'Through this agreement we should be able to measure and understand the potential for Korean films in the UK and UK films in Korea.'
'The UK Film Council and the Korean Film Council have a shared vision on cultural diversity,' added KOFIC chairperson An Cheong-sook. 'Our aim is to not only support national cinema, but to also ensure that a diverse range of films receive a theatrical release.'
In 2006, a total of eight UK films had theatrical releases in Korea including The Constant Gardener and The Wind That Shakes The Barley. Meanwhile, two Korean films were released in the UK last year - Sympathy For Lady Vengeance and The Host.
Theatrical releases are deemed essential in Korea where the DVD market is small, which explains why more UK films get released there than vice versa. In the UK, where the DVD market is vibrant, most Korean films go straight to video.
The two councils said they hoped that the agreement would balance the trade deficit, and lead to an overall increase in the number of UK and Korean films released in each other's markets.
The UK Film Council is attending Pusan with a delegation of three UK film companies - Bankside Films, Odyssey Entertainment and Silk and Steel Productions - which are all setting up booths in the Asian Film Market (Oct 8-11).
Among the UK films screening at the fest are Anton Corbijn's Control, Peter Greenaway's Nightwatching and Far North directed by Asif Kapadia.