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EUROFER expresses concerns over FTA with South Korea

EUROFER expresses concerns over FTA with South Korea

26 April 2010

SteelOrbis - On April 23, the European Confederation of Iron and Steel Industries (EUROFER) released a statement expressing its concerns regarding the possible distortive effects of the negotiated market access conditions under the EU-South Korea Free Trade Agreement (FTA) on the European automotive market, which is the main customer base of the European steel industry.

Commenting on the issue, EUROFER director general Gordon Moffat said, "Unfortunately, the first free trade agreement negotiated under the Global Europe Trade Strategy has not led to a balanced outcome safeguarding the integrity of the whole steel supply value chain. The result is sectoral winners and losers with potential negative effects for steelmaking in Europe."

EUROFER referred in particular to the combined effects of certain essential provisions of the FTA which it says will set a framework for a surge in South Korean car exports to the EU, with little reciprocity in reality. These include, elimination of EU import tariffs on cars (from 10 percent to 0 percent over five years), in the context of the European car net import imbalance (about 400,000 vehicles from South Korea compared to about 30,000 from the EU to South Korea in 2009); increased level of permissible foreign car content to receive duty-free EU market access, which would allow South Korean manufacturers to decrease their costs with parts from neighboring low-cost countries such as China and continuation of duty draw back especially after the EU import tariff elimination, allowing South Korean automotive manufacturers to continue to reclaim import duties on imported vehicle parts from those neighbouring countries (such as China), giving additional financial support to Korean exports.

EUROFER also asked the European Parliament and the European Council to address these concerns.

As SteelOrbis previously reported, in September 2009 the European Automobile Manufacturers’ Association (ACEA) had released an open letter to the European Union member states (EU-27) demanding that the European Commission should improve the conditions of the upcoming free trade agreement (FTA) with South Korea, emphasizing the likely imbalance to emerge in automotive trade between the two parties.