ACEA

Auto industry underlines conditional nature of today’s Council decision on free trade agreement with South Korea

Brussels, 16/09/2010 – The European automobile industry, in response to the Council decision today to give its conditional go-ahead to the free trade agreement with South Korea, reiterates that further improvements remain necessary to ensure a fairer and more balanced deal.

ACEA underlines that the Council has made the provisional application of the trade agreement conditional to:

• The European Parliament’s consent;
• Related safeguard regulation being into force;
• The assurance that the introduction of CO2 regulation for cars in South Korea will not impose an unfair burden on EU exporters;
• The impact of the discussions between the United States and Korea on their trade agreement.

The Council also agreed on the importance of an effective safeguard which provides protection in the case of sudden surges of imports in sensitive sectors, including small cars.

“We call on the European Commission, EU Member States and the European Parliament to respect these significant points”, said Ivan Hodac, Secretary General of ACEA. The free trade agreement in its current form will lead to undue pressure on manufacturing levels in Europe. The safeguard regulation, in particular, must be defined in such a way that its application is feasible and effective. The EU must also keep a close watch on whether improvements will be granted to the United States, and if so, automatically apply these also for the EU.

In line with the recent vote in the European Parliament, the safeguard mechanisms should cover the so-called duty drawback arrangements granted to South Korea and this from the very moment that the agreement enters into force. With the duty drawback system, South Korean manufacturers will maintain an unfair competitive advantage over their European competitors because they can purchase components from neighbouring countries and, subsequently, claim the import duties back when exporting the whole vehicle to the EU. This, in fact, translates into an export subsidy.

It would be the first time that the EU agrees to such a definite provision in an FTA, thereby setting a worrying precedent in view of upcoming trade agreements with other major economic forces. ACEA asks that the duty drawback clause, if at all granted, be at least limited in time.

A background dossier on all points in the FTA is available here

About ACEA

The European automotive industry is key to the strength and competitiveness of Europe. The ACEA members are BMW Group, DAF Trucks, Daimler, FIAT Group, Ford of Europe, General Motors Europe, Jaguar Land Rover, MAN Nutzfahrzeuge, Porsche, PSA Peugeot Citroën, Renault Group, Scania, Toyota Motor Europe, Volkswagen Group, Volvo Cars, Volvo Group. They provide direct employment to more than 2.3 million people and indirectly support another 10 million jobs. Annually, ACEA members invest over €26 billion in R&D, or 5% of turnover.

For further information, please contact Sigrid de Vries, Director Communications, ACEA +32 2 738 73 45 or .(JavaScript must be enabled to view this email address) Please also visit http://www.acea.be

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