European Auto Makers Demand Fair Competition

The European Automobile Manufacturers´ Association urged the European Commission to curb unfair competition
European Auto Makers Demand Fair Competition
The Kia 'Forte Hybrid LPI' powered by liquefied petroleum gas (LPG) and an electric motor with lithium ion polymer batteries is the company's first hybrid car. (Jung Yeom-Je/AFP/Getty Images)
7/26/2009
Updated:
10/1/2015
<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/EUauto89030408.jpg" alt="The Kia 'Forte Hybrid LPI' powered by liquefied petroleum gas (LPG) and an electric motor with lithium ion polymer batteries is the company's first hybrid car. (Jung Yeom-Je/AFP/Getty Images)" title="The Kia 'Forte Hybrid LPI' powered by liquefied petroleum gas (LPG) and an electric motor with lithium ion polymer batteries is the company's first hybrid car. (Jung Yeom-Je/AFP/Getty Images)" width="320" class="size-medium wp-image-1827127"/></a>
The Kia 'Forte Hybrid LPI' powered by liquefied petroleum gas (LPG) and an electric motor with lithium ion polymer batteries is the company's first hybrid car. (Jung Yeom-Je/AFP/Getty Images)
GOTHENBURG, Sweden—The European Automobile Manufacturers´ Association (ACEA) urged the European Commission (EC) to curb unfair competition in the ongoing trade negations with South Korea.

Current proposals in the Free Trade Agreement negotiations give a competitive advantage to the South Korean automobile industry, said Ivan Hodac, Secretary General of ACEA in press statement earlier this month.

The key concerns relate to the Rule of Origin that regulates the proportion of foreign parts used in cars, and the “Duty Drawback Clause” that allows the refund of duty paid on imported parts used in producing vehicles for export. If the current proposals in the negotiations were finalized, Korea would be able to lower the production cost of vehicles by increasing the cheaper duty free parts from other countries like China, according to ACEA.

Another complaint concerns South Korea´s reluctance to fully accept international vehicle standards, especially in the fields of emissions and safety, and impose unique rules that require European manufacturers to make expensive modifications on the vehicles.

In a prompt reply to the ACEA complaints, EC Spokesperson for Trade, Lutz Guellner, assured that the outcomes of the negotiations would benefit both parties.

The EC said there is no effective way to restrict foreign content, but Korean cars currently contain only 10 percent imported parts, which is insignificant. As for the duty refund, the EU manufacturers are also exploiting the possibility.

The finalized FTA would “swiftly eliminate” unfair duties and EU car exporters will save about 2000 euro per car. South Korea will also accept European safety standards.

In 2008, South Korea enjoys a total EU-trade surplus of about 14 billion euros ($20 billion), of which 14 percent are from automobile imports. Last year, 37,000 European cars were sold to Korea while the EU imported 446,000 cars from Korea, although the values of the European cars are substantially higher.

Nevertheless, the trade figures are still unbalanced, but may be moving in the right direction. In 2007, the EU exported only 28,000 cars to South Korea, while imports closed at about 700,000. Korean car manufacturers have invested substantially in production facilities in EU, which explains the lower import figures.

Car sales in Europe have been falling for 13 consecutive months. Low profitability and the prolonged credit crisis have increased concern in Europe’s automobile sector, which many economists consider as the “engine” of the European economy.
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