Statement on the Commission’s third annual report on the implementation of the EU-Korea FTA

The European Commission last week published its third annual report on the implementation of the EU-Korea Free Trade Agreement (FTA). The European Automobile Manufacturers’ Association (ACEA), which has been closely monitoring the application of the agreement, today commented on the Institution’s analysis.

The European automobile industry is encouraged by the increase in EU exports of motor vehicles to Korea. Several factors have contributed to this increase, such as European vehicles’ reputation for environmental and safety performance, as well as a general increase in demand for European brands. These trends reflect shifts in consumer tastes that predate the implementation of the FTA. However, the EU-Korea trade balance – in terms of volume – remains strongly favourable to the Asian partner, which experienced a 175,000 unit trade surplus in 2014.

Trade flows have risen in both directions, but long-standing Korean non-tariff barriers remain which are costly and burdensome for European manufacturers, while new barriers have emerged. ACEA shares the European Commission’s view that, “in the automotive sector tackling the remaining non-tariff barriers remains a challenge.”  

ACEA welcomes the Commission’s raising of these issues with their Korean partners. However, ACEA is concerned by the persistence of market access issues nearly three years after the implementation of the FTA, despite their having been raised repeatedly with the Korean authorities.

Speaking after the publication of the report, ACEA Secretary General Erik Jonnaert said, “ACEA appreciates the agreement reached, last October, between Commissioner De Gucht and Korea’s Minister for Trade, Industry and Energy, Mr Yoon Sang-Jick, to proceed with the technical amendment of the non-tariff annex on motor vehicles and parts to update obsolete references. This agreement provides a good precedent and starting point, which ought to be followed by amendments on the substance of this annex.”

The EU report states that “discussions to amend the FTA will continue in the fourth year of implementation, with a view to finding a balanced package of amendments with economic benefits”. ACEA welcomes this commitment and trusts that the Korean authorities will engage constructively with the European Commission in this process.

Said Mr Jonnaert, “ACEA is still hopeful that mutually-beneficial solutions can be found in the long run. We remain ready to continue dialogue with the European Commission in order to achieve the most effective application of the agreement and the facilitation of automotive trade.”

“ACEA hopes that the Commission will take into account the lessons learned in the implementation of this FTA in ongoing and future trade negotiations”, added Mr Jonnaert.

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