French flap over car imports invokes response from Seoul

The government has expressed strong opposition to France’s request that the European Union take “prior surveillance measures” to guard against Korean car imports, which are on the rise and increasingly seen as a threat to European car makers.

If the measures are approved, local authorities could demand more exacting paperwork for inbound shipments of cars or car parts, which would make life harder for Korean exporters.

The Ministry of Foreign Affairs and Trade said yesterday it has ordered embassies and diplomatic offices in Europe to devise responses to France’s action. The ministry said France’s claim that its auto market is suffering due to a rise in Korean car imports lacks persuasiveness.

The Korea-EU free trade agreement that took effect on July 1 last year includes a safeguard clause allowing Europeans to reimpose tariffs if producers in “sensitive” industries are hit by a particularly strong surge in imports.

“The Korea-EU FTA was a ‘win-win’ deal for both sides, but this kind of one-sided claim doesn’t gel with the philosophy of the FTA,” an official from the Trade Ministry said.

On Monday, the EU said it is examining France’s request. “The European Commission confirms it has received a note from the French authorities requesting prior surveillance measures for South Korean car imports,” EU Trade Spokesman John Clancy said in a statement on Monday. “The commission is carefully reviewing the request.”

According to EU regulations, the commission, the executive arm of the EU, has until September to decide whether it will accept France’s proposal.

Industry experts said that if Korea is tagged as a “prior surveillance target country” by the EU, Korean auto makers’ operations in Europe could take a hammering.

Korea has seen robust car exports to the EU despite the sense of economic doom and gloom hanging over the continent, much to the chagrin of European car makers.

Sales of Hyundai Motor Group, Korea’s largest auto maker, jumped 17.4 percent in the first half of this year, one of only several carmakers to post growth in Europe.

In France alone, it saw sales grow 28.5 percent on-year, whereas French automaker PSA Peugeot-Citroen was hit by a 21.6 percent on-year decrease in domestic sales. Its compatriot Renault also suffered an 18.6 percent drop.

Hyundai Group has refuted France’s claim by arguing that most of the models it sells in Europe are manufactured there, meaning that it gains little from the FTA.

By Joo Kyung-don [kjoo@joongang.co.kr]