A European auto trade body has said today's (16 September) decision by the EC to conditionally give the go-ahead to the Free Trade Agreement (FTA) with South Korea needs further improvements to make the deal fairer.

In a statement loaded with caveats, the European Automobile Manufacturers Association (ACEA) highlights the Council's own series of conditions to the deal that include European Parliament consent, an assurance South Korean CO2 vehicle regulations would not impose "an unfair burden on EU exporters" and the impact of talks between the US and Korea.

The Council also agreed on the importance of an effective safeguard which provides  protection in the case of sudden surges of imports in what it termed "sensitive sectors," including small cars.

 "We  call  on  the European Commission, EU Member States and the European Parliament  to  respect  these significant  points",  said ACEA secretary general Ivan Hodac.

ACEA added the FTA in its current form would  lead  to undue  pressure  on manufacturing  levels in Europe and that the safeguard  regulation in particular, must be defined in such a way that its application is "feasible and effective."

The EU, said ACEA, should also keep examine whether improvements will be granted to the US and if so, also automatically apply these for the EU.

The ACEA statement added: "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 subsidy."

This would mark the  first time the EU agreed to such a definite provision in an FTA, said the ACEA, which would set a "worrying precedent" in view of
upcoming trade agreements with other major economic forces.

ACEA added if the duty drawback clause was granted, it should at least be limited in time.