Brussels, Belgium – European automobile manufacturers have requested that European Union member states reject a proposal for a free trade agreement with South Korea, and revise the timeline for concluding negotiations. The European Automobile Manufacturers’ Association (ACEA) said that the agreement is unfair, and is unacceptable in light of the current economic crisis.
Negotiations with South Korea are entering a decisive stage, with final meetings of the EU trade expert committee starting Friday, February 5, with an objective to seal an agreement in early March. ACEA argues that the agreement would give South Korean vehicle manufacturers full market access to Europe, without a tangible improvement in export conditions to South Korea. The automakers further argue that the agreement would fail to secure the application of existing international vehicle standards, and set a precedent for arrangements with other countries, notably in Asia, which they said would lead to further unfair competition.
“The EU must refrain from entering into unbalanced trade agreements that further weaken the competitiveness of the European economy, and this is especially true in times of economic turmoil,” said Ivan Hodac, secretary general of ACEA. “On the one hand, EU member states are rightly prepared to use public money to stimulate vehicle demand and warrant financial support to relieve the credit crunch. But at the same time, Europe would grant a costly trade agreement that will multiply the pressure on employment levels in the EU.”
The European Commission is proposing to dismantle import tariffs over three to five years, depending on the vehicle category, as opposed to the originally-proposed seven years that corresponds with the usual lead-in time for OECD countries. Dismantling the tariffs would make Korean cars 10 per cent cheaper, which the ACEA said is a large portion of their average vehicle price of €10,000. The ACEA is demanding a minimum of seven years for tariff dismantling. Currently, South Korea exports 600,000 vehicles per year to the EU, but exports from the EU into South Korea are limited to around 22,000 vehicles per year, in a market of more than one million new vehicles annually.
The automakers said they are in favour of further bilateral and multilateral trade liberalization, but insist that the process has to deliver mutual benefit and fair market access, covering both import duties and non-tariff barriers. Other European manufacturing sectors, such as electronics, pharmaceuticals and textiles, have raised objections to the arrangement as well.
Members of the ACEA include BNW Group, DAF Trucks, Daimler, Fiat Group, Ford of Europe, General Motors Europe, Jaguar Land Rover, MAN Nutzfahrzeuge, Porsche, PSA Peugeot Citroën, Renault, Scania, Toyota Motor Europe, Volkswagen and Volvo.