EU refuses French bid to monitor Korea car imports

Reuters | Mon Oct 22, 2012

EU refuses French bid to monitor Korea car imports

The European Commission has turned down France’s request that imports of cars from South Korea be subject to checks, which could have led to duties being reimposed despite a free-trade deal struck last year.

France called on the Commission in August to require South Korea give advance notice of planned car exports to the European Union after a surge of auto shipments since the EU’s free trade agreement (FTA) with South Korea entered force in July 2011.

The EU-South Korea FTA is seen by the European Union as a model for future trade deals and includes a safeguard clause allowing Brussels to re-impose duties if producers in sensitive industries are hit by a particularly strong surge in imports.

The Commission sent a letter to France on Monday explaining that the French request was based on a provision requiring them to show that imports were concentrated in one or several EU member states and this condition had not been met.

Korean car imports into the EU did rise by 41 percent in the year to the end of June 2012, the increase in France in the same period was 24 percent, according to Eurostat data.

"While it is true that the car sector in the EU, and in particular in France, is going through a difficult period, this cannot be attributed to the entry into force of the EU-Korea FTA," EU Trade spokesman John Clancy said.

The Commission added that the level of EU car imports from Korea was 37 percent below their level before the financial crisis and so their rise could be seen as a recovery effect.

"The Commission, however, remains vigilant and continues to closely monitor the development of Korean imports into sensitive sectors such as cars, textiles and consumer electronic products," Clancy said.

The surveillance France sought would have meant authorities could have demanded a document to accompany products scheduled for export to the European Union.

French carmakers are struggling in the face of rising competition, losing market share to Korea’s Hyundai (005380.KS) and affiliate Kia (000270.KS).

The country’s biggest carmaker, PSA Peugeot Citroen (PEUP.PA) in July announced plans to close a plant near Paris and cut 8,000 jobs.

Hyundai has said that its EU growth is based on products designed and built there, with less than 12 percent of Hyundai cars registered in Europe during the first half of 2012 built in Korea and some 70 percent coming from the European region.

Hyundai’s main European plants are in the Czech Republic and Turkey.

EU Trade Commissioner Karel De Gucht has said that trade with South Korea benefits Europe overall, pointing to data showing EU exports to the Asian country jumped 16 percent in 2011 to 32 billion euros (26.14 billion pounds). That compares to 25 billion euros in 2007.

(Reporting by Philip Blenkinsop; Editing by Michael Roddy)

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source: Reuters