ACEA reiterates caveats over South Korea trade agreement
Under the agreement, which will be provisionally applied from 1 July 2011, 98.7% of duties in trade value for both industry and agriculture will be eliminated within five years, with remaining tariffs almost fully eliminated over longer periods.
However the ACEA has expressed its continued concerns over the FTA and its effects on carmakers and the manufacturing industry in Europe.
It has also highlighted the Council's own set of conditions that it has made the provisional application of the trade agreement conditional to, including the European Parliament’s consent, related safeguard regulation being into force, the assurance that the introduction of CO2 regulation for cars in South Korea will not impose an unfair burden on EU exporter and the impact of the discussions between the United States and Korea on their trade agreement.
In particular, it has drawn attention to the Council's agreement on the importance of an effective safeguard which provides protection in the case of sudden surges of imports in sensitive sectors, including small cars.
In a statement, the ACEA said: 'The free trade agreement in its current form will lead to undue pressure on manufacturing levels in Europe. The safeguard regulation, in particular, must be defined in such a way that its application is feasible and effective. The EU must also keep a close watch on whether improvements will be granted to the United States, and if so, automatically apply these also for the EU.'
It also added the caveat that the safeguard mechanisms should cover the duty drawback arrangements granted to South Korea from the moment that the agreement enters into force.
The statement said: 'With the duty drawback system, South Korean manufacturers will maintain an unfair competitive advantage over their European competitors because they can purchase components from neighbouring countries and, subsequently, claim the import duties back when exporting the whole vehicle to the EU. This, in fact, translates into an export subsidy.
'It would be the first time that the EU agrees to such a definite provision in an FTA, thereby setting a worrying precedent in view of upcoming trade agreements with other major economic forces. ACEA asks that the duty drawback clause, if at all granted, be at least limited in time.'