S. Korea, EU have differences over automobiles in free trade talks
The Hankyoreh, Seoul
S. Korea, EU have differences over automobiles in free trade talks
17 July 2007
Brussels - Yonhap News. South Korea and the European Union are struggling to narrow differences on tariffs and safety regulations on automobile trade as they try to forge an ambitious free trade agreement, a top South Korean negotiator said Tuesday.
"Now, we’re going through the EU’s proposed tariff reductions on cars, but we need more time to decide our stance," Deputy Trade Minister Kim Han-soo said on the second day of the two sides’ second round of free trade negotiations since May. "The EU considers the automobile sector as one of the most important issues." South Korea is being asked to quickly open its auto and auto parts markets, which the 27-nation EU believes have kept out European cars. However, the South Korean government has maintained a conservative stance on the automobile sector because it could potentially result in bigger losses for its auto industry.
The EU asked South Korea to phase out its 8 percent tariff on auto imports within three years, while Seoul proposed to phase out the tariff within seven years, according to an official at the South Korean delegation, who asked not to be named, citing the sensitivity of negotiations.
Last year, South Korea sold some 740,000 cars, worth US$9.1 billion, in Europe, while European automakers sold about 15,000 vehicles, worth $1.6 billion, in South Korea, according to data by the South Korean government. The EU’s average tariff on car imports is 10 percent.
"As a matter of fact, if we agree on the EU’s proposal, it would bring both benefits and burdens to our companies," Kim said.
"We should make a decision on which is our priority."
On Monday, the EU’s chief negotiator Ignacio Garcia Bercero expressed disappointment at the South Korean proposal.
In response, Kim said Seoul is considering revising its offer on cars before the third round of talks in September.
South Korea won’t provide any new proposals on autos during this week’s talks, Kim said.
The EU was also asked to exclude South Korean cars from the EU’s regulations on emission control, but Brussels refused to do so because the regulations must apply to all imported cars, Kim said.
Kim said he expected those issues would be back on the bargaining table at upcoming meetings.
On other subjects, South Korea wants the EU to ease its laws to protect European companies from goods being sold at excessively low prices, a practice known as dumping. Still, the EU side has so far made no response to Seoul’s demand, Kim said.
Other sticking points include pharmaceuticals, cosmetics as well as removal of non-tariff barriers in services and investment.
If successful, the agreement would be the biggest yet for South Korea, even larger than the agreement signed with the United States.
A deal would boost bilateral trade between South Korea and the EU, totaling $79 billion a year, by as much as 40 percent, according to a statement released by the EU’s executive body.
South Korea and the U.S. signed a free trade agreement earlier this month but the deal needs to be ratified by the South Korean National Assembly and the U.S. Congress.
