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Auto industry underlines conditional nature of today’s Council decision on free trade agreement with South Korea


16 Sep 2010


Trade & Society

 Brussels,  16  September  2010  –  The  European  automobile industry, in

response  to  the Council decision today to give its conditional go-ahead

to  the  free  trade  agreement with South Korea, reiterates that further

improvements remain necessary to ensure a fairer and more balanced deal.

ACEA  underlines that the Council has made the provisional application of

the trade agreement conditional to:

· 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 exporters;

· The impact of the discussions between the United States and Korea on

their trade agreement;

The Council also agreed on the importance of an effective safeguard which

provides  protection in the case of sudden surges of imports in sensitive

sectors, including small cars.

“We  call  on  the European Commission, EU Member States and the European

Parliament  to  respect  these  significant  points”,  said  Ivan  Hodac,

Secretary  General  of ACEA. 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.

In  line  with  the recent vote in the European Parliament, the 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. This, in fact, translates into an export


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


A background dossier on all points in the FTA is available at

About ACEA

The   European   automotive   industry   is   key  to  the  strength  and

competitiveness  of  Europe.  The ACEA members are BMW Group, DAF Trucks,

Daimler,  FIAT  Group, Ford of Europe, General Motors Europe, Jaguar Land

Rover,  MAN  Nutzfahrzeuge,  Porsche, PSA Peugeot Citroën, Renault Group,

Scania,  Toyota  Motor Europe, Volkswagen Group, Volvo Cars, Volvo Group.

They provide direct employment to more than 2.3 million people and 

indirectly support another 10  million  jobs. Annually, ACEA members 

invest over €26  billion in R&D, or 5% of turnover.

For further information, please contact Sigrid de Vries, Director

Communications ACEA  +32 2 738 73 45 or

Please also visit

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