EU disputes France’s complaint against Korean carmakers

The European Union rejected French authorities’ claim that the Korea-EU Free Trade Agreement brought rapid import growth of automobiles produced by Korean companies.

EU Trade Commissioner Karel de Gucht said “it is not true” that European countries’ imports of cars produced in Korea posted a sharp increase under the bilateral FTA.

He said that the sales growth of Hyundai Motor and Kia Motors in Europe was not primarily due to the trade pact but their manufacturing at localized plants in European countries.

Several months ago, the French government asked the commission to introduce prior surveillance measures of Korean car imports.

The country argued that Korean vehicles have been snatching a huge portion of the market share since the Korea-EU FTA’s effectuation in July 2011.

It demanded measures such as a safeguard, saying that sales of Hyundai Motor and Kia Motors in Europe surged 28.5 percent this year, whereas French carmakers experienced a 14.4 percent drop.

French authorities notified Korea of their policy through the French Embassy in late July, according to officials of the Foreign Affairs and Trade Ministry in Korea.

“The French government is not entitled to issue the safeguard measures without endorsement,” de Gucht said. “We could take countermeasures after reviewing whether FTA clauses allow the EU executive committee to approve the country’s vehicle import restriction.”

Most of the Hyundai and Kia vehicles sold in Europe are produced in EU countries such as the Czech Republic and Slovakia.

“We have not benefited much from the Korea-EU FTA as the tariff was zero even before effectuation of the trade pact,” a Hyundai Motor Group executive said.

“As French-made cars are suffering lackluster sales in Korea, the country is seemingly moving to take retaliatory action on vehicles that are exported to Europe,” he said.

Hyundai and its affiliate Kia expect some losses if the safeguard action goes into effect, as some export models are produced in Korea.

“But under the situation, the greater victims would be Renault Samsung and GM Korea (which own no European plants),” he predicted.

Renault Samsung Motors is the Korean unit of Paris-based Renault Group. The company, which operates manufacturing plants in Busan, is suffering a rapid sales drop at home and abroad.

By Kim Yon-se (kys@heraldcorp.com)