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EU car makers want to scrap EU-S. Korea trade pact

The Associated Press | February 5, 2009

EU car makers want to scrap EU-S. Korea trade pact

BRUSSELS: European car makers called Thursday for the European Union to scrap a draft free-trade deal with South Korea, saying it won’t let them increase exports during a sales slump at home.

Auto association ACEA — which represents European automakers such as Volkswagen AG and PSA Peugeot-Citroen — said a deal now being negotiated would not eliminate barriers that hold back their exports to South Korea. It said the draft trade pact is unbalanced because it would allow South Korean rivals to ramp up exports as they gain full access to the EU market.

"Europe would grant a costly trade agreement that will multiply the pressure on employment levels in the EU," said ACEA secretary general Ivan Hodac.

EU spokesman Peter Power said talks on a deal were well advanced and would give many European sectors — including car makers — substantial access to the South Korean market. The EU says it could halt South Korean car imports if there was a sudden surge that damaged European producers.

The European car industry says it is in crisis after sales slipped nearly 8 percent last year in the region. It is looking for billions of euros (dollars) in government help to keep jobs and invest in more fuel-efficient vehicles that meet new EU environmental rules.

It is calling on EU governments to reject the current deal when they start discussing it on Friday. EU nations must give the final word to any pact negotiated by the European Commission which hopes to seal an agreement with Seoul in early March.

ACEA also complained that the trade pact set a bad example for deals with other Asian nations because it would allow South Korea keep local standards on vehicle emissions and safety that deter European exporters.

It says ending EU import tariffs on South Korean cars would let them increase exports significantly because it would make them 10 percent cheaper over the next three to five years.

South Korea sells some 600,000 cars to Europe every year, mostly at the cheaper end of the 15 million cars sold there. The EU sold 32,000 cars to South Korea in 2007 — a small chunk of the 1 million cars bought in the country annually.

 source: IHT