Chances are unlikely that the bloc will impose higher tariffs: experts


The European Commission, the European Union’s executive body, has begun reviewing France’s request to require Korea to give advanced warning of planned car exports to the EU.

“The European Commission confirms it has received a note from the French authorities requesting ... prior surveillance measures for South Korean car imports,” EU’s trade spokesman John Clancy said in a statement.

“The Commission is reviewing carefully the request.”

Under such surveillance, companies would have to submit documents for approval before bringing in their products to the EU. This would give advance warning of the type and number of products scheduled for shipment to the EU.

The Commission is expected to announce by early next month whether it will accept the request.

Even if Korean car imports are put under prior surveillance, the results of the surveillance must prove that serious harm can be done to the French auto industry in order for the EU to increase customs duties or suspend their reduction.

Under the Korea-EU free trade agreement, which went into effect in July last year, such measures can be adopted if imports of a certain item increase sharply and “cause or threaten to cause serious injury to a domestic industry producing like or directly competitive goods.”

Some trade experts say the EU is unlikely to change course on tariffs, which would require a number of procedures, at the cost of triggering a trade dispute with Korea.

Being put under prior surveillance alone, however, could discourage Korean carmakers’ sales activities in Europe.

The French government said a rapid surge in Korean car imports was doing harm to its auto industry, noting that Hyundai and Kia vehicle sales in the first half of this year rose 28.5 percent on-year when total car sales in France dropped 14.4 percent from a year ago.

However, while Korean car exports to the EU jumped last year to 345,000 vehicles, they were well below the 640,000 units recorded in 2007 and an increasing number of Korean cars for sale in Europe are rolled out from European factories.

Additionally, most Hyundai-Kia vehicles sold in Europe are produced in the Czech Republic, Slovakia and Turkey.

“The growth of Hyundai in Europe is based on products designed, engineered and built in Europe,” said Andreas Brozat, a spokesman for Hyundai Motor’s European arm.

“Less than 12 percent of the 232,454 Hyundai cars registered in Europe during the first half of 2012 were built in Korea, while 70 percent came from the European region.”

French Industry Minister Arnaud Montebourg complained that French automakers, already distressed by sluggish demand in the eurozone, have to go through additional production and job cuts as they are further hit by competition with Korean cars.

Italy’s Fiat is also suffering from low sales, announcing last week that it would stop new investments in production and sales.

The FTA cut the EU’s 10 percent tariff on imported Korean cars by 1.7 percentage points for cars with engines below 1,500 cc and 3 percentage points for those over 1,500 cc.

By Kim So-hyun (sophie@heraldcorp.com)