EU Rejects French Request to Monitor Korean Car Imports

European Union regulators rejected France’s demand to monitor imports of South Korean cars more closely, according to the EU and South Korea’s Trade Ministry.

“The European Commission told us on Oct. 22 that they officially notified the French government that it will not introduce prior surveillance on South Korean cars, as France had requested,” the ministry said in a statement late today in Seoul.

EU spokesman John Clancy confirmed that France’s request had been rejected because the legal conditions for taking action weren’t met. The European Commission will remain “vigilant” and won’t hesitate to use available tools when needed, he said.

“Even if imports into the EU of cars from Korea indeed increased over the last months, there was no indication that such an increase was concentrated in France,” Clancy said in a statement.

The Commission was due to decide whether to act on the French call for EU-wide surveillance of imports of Korean autos barely a year after the bloc began phasing out a 10 percent duty. France made the request on Aug. 3 after PSA Peugeot Citroen (UG), the country’s largest carmaker, said it would close a factory near Paris and eliminate 14,000 jobs.

France’s Foreign Ministry’s press office declined to comment today when called by Bloomberg News.

The free-trade accord with Korea took effect in July 2011. European carmakers opposed the agreement, saying it would give an unfair edge to companies such as Hyundai Motor Co. (005380) and Kia Motors Corp. (000270) because of a disparity in auto trade.

Duty Free

The deal, which will make 99 percent of EU-Korea commerce duty-free by 2016, phases out the EU’s tariff on Korean cars over three to five years and ends an 8 percent duty on European autos in the same period. The accord includes procedures to protect against any surge in imports of cars.

“While it is true that the car sector in the EU, and in particular in France, is going through a difficult period, this cannot be attributed to the entry into force” of a free trade agreement between the EU and South Korea, the EU’s Clancy said. “In general, trade figures more than one year after the entry into force of the agreement are rather encouraging and indicate that the EU mostly benefited from this FTA so far.”

To contact the reporters on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net; Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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