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Korean brands get conditional go-ahead on free trade with Europe

European carmakers are lobbying for improvements to a free trade agreement with South Korea which is feared could lead to floods of imports in the small car segment.

The European Council yesterday gave a go-ahead to the agreement, on several conditions.

ACEA, the European trade body for carmakers, fears the agreement could put added pressure on vehicle manufacturers in Europe, and wants improvements to the agreement that ensure they get a fair deal.

The agreement's application is conditional to safeguard regulation being into force, to assurance that the introduction of CO2 regulation for cars in South Korea will not impose an unfair burden on EU exporters, to the impact of the discussions between the United States and Korea on their trade agreement, to 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.

ACEA said the free trade agreement in its current form will lead to undue pressure on manufacturing levels in Europe.

It said a duty drawback system gives South Korean manufacturers 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.

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