The Free Trade Agreement (FTA) with South Korea was the first of the new generation of bilateral trade agreements concluded by the EU. Negotiations began in May 2007 and after eight rounds the agreement was signed in October 2009. The FTA was officially signed in October 2010 and has been in provisional application since 1 July 2011.
The automobile industry has asked the Commission to bring to the attention of the Korean authorities the various market access issues in South Korea that remain. The application of the Automotive Annex is subject to different interpretations and the Korean authorities remain reluctant to dismantle existing non-tariff barriers (NTBs). In the meantime, new barriers have emerged. ACEA believes that the European Commission needs to continue to actively monitor the application of this FTA.
Today, South Korea is the third biggest importer of cars into the EU in terms of units, representing a 14.1% share of EU imports in 2016. In terms of value, it comes in fourth place (behind Japan, the US and Turkey).
Despite a shrinking EU market, Korean automobile imports into the EU are increasing year-on-year. In the first year of its implementation, South Korea exported just under 381,000 domestically-manufactured passenger cars into the EU; a figure which was up 41% from the same period one year earlier.
By contrast, over the same time frame South Korea imported over 80,000 European passenger cars, which represents an increase of 7%. EU exports to Korea are still limited to less than 6% of the total market share in 2016, and are made up almost exclusively of premium cars. ACEA considers the increase to be due to changing South Korean consumer demand, rather than the effects of the FTA itself. As a result, the Korean car market will remain difficult to access.