The European carmakers’ association Acea has warned that current proposals in free trade negotiations between the EU and South Korea give an unfair competitive advantage to Korean industries.

“The responsibility resting on policy makers is huge,” said Ivan Hodac, ACEA’s secretary general, ahead of the G8 meeting in Italy and an EU diplomats’ meeting in Brussels this week.

“The current proposals give an unfair competitive advantage to Korean industries and set a harmful precedent for FTAs between the EU and other major trading partners, undermining an important pillar of standing EU trade policy. Such an outcome would affect EU industries far beyond the auto industry alone and pose a severe risk to the manufacturing base of Europe,” added Hodac.

“This is unacceptable, and even more so in a time when all efforts are aimed at getting through the current economic crisis. There is absolutely no reason to open a European market of over 500 million people on Korean terms.”

ACEA said the EU should reject, in particular, any compromises on the so-called Duty Drawback clause and Rules of Origin threshold, both essential instruments to ensure a level playing field in international trade.

“First, South Korean manufacturers would be allowed to import higher amounts of parts and components from neighbouring countries. Second, they could claim the duties back that they paid on these parts, as soon as the full product – also duty-free – is on its way to Europe,” added Hodac.

“This proposal effectively opens the door for cheap imports from China and other Asian countries, without giving similar advantages to European industries.”

The current proposals, furthermore, do not sufficiently improve access to the South Korean market, ACEA said. In particular, they fail to secure existing international vehicle standards when entering the Korean market, notably in the fields of emissions and safety. This constitutes an important non-tariff barrier to trade, it said.