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ACEA says changes to trade deal 'can and must be made'

By / 7 years ago / Latest News / No Comments

The European Parliament met in plenary in Strasbourg and approved amendments to the safeguard measures that will accompany the free trade agreement (FTA) with South Korea. However, the final vote has been postponed to the 18-21 October plenary session, to allow time for a first-reading agreement with the Council.

By applying safeguard measures, the EU could suspend further reductions in customs duties or increase them to previous levels, if lower rates were to lead to an excessive increase in imports from South Korea, causing or threatening to cause "serious injury" to EU producers.

Representatives of the EU Member States are expected to discuss next steps in Brussels later this week. Apart from finalising the safeguards regulation, the European carmakers' association, the ACEA, says that a number of other important issues must be addressed before concluding the FTA or agreeing a provisional application of the deal, as has been proposed by the Commission.

'We need better guarantees that the FTA will be balanced and fair,' said Ivan Hodac, ACEA secretary general. 'The South Korean government will, for example, introduce CO2 legislation that could constitute a new non-tariff barrier to trade, halting EU car exports to the country. The EU must put measures in place to prevent such situations.'

The ACEA highlights the importance of the latest vote in clearly stating that the FTA safeguard mechanisms should cover the so called-duty drawback arrangements granted to South Korea, and this from the very moment that the agreement enters into force. 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.

The ACEA added: '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.'

The Parliament has also voted for a "regional clause" under which the effects of the FTA on European regions should be monitored and, possibly, compensated, in particular with regard to manufacturing levels. The ACEA concluded: 'As the Commission’s impact assessment revealed, the FTA is certain to lead to job losses in the EU.'

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