'No merit' to Korea-France spat
SOUTH KOREAN SUCCESS A THREAT?: Hyundai and Kia's success in Europe has been called into question by French authorities.
BRUSSELS, Belgium - French allegations that South Korea is guilty of unfair competition in the auto industry do not appear to have any merit, European Union trade commissioner Karel De Gucht says.
France, home to Peugeot, Citroen and Renault - direct competitors for South Korea's Hyundai and Kia - has asked the European Union (EU) to place Korean car imports under surveillance.
IMPORT DUTIES UP?
The move could pave the way for a request to activate a safeguard clause in the EU-South Korea free trade agreement allowing the bloc to raise import duties for a limited period but the EU's executive, the European Commission, would have to agree.
De Gucht said during an interview in Brussels: "We are investigating this, but what the French are claiming is simply not true. There is very little if no evidence. There is not that kind of huge surge (in imports) that they claim."
De Gucht pointed out that many Korean cars were assembled not in the Asian country but in Europe. He also defended the FTA with South Korea, noting that it had led to the EU's trade deficit going down "considerably."
FINANCIAL CRISIS TO BLAME
But the auto industry has railed against the agreement, with Fiat-Chrysler boss Sergio Marchionne - who chairs the European Automobile Manufacturers' Association - complaining about an "almost miraculous" ensuing inflow of cars. EU imports of Korean cars have increased by 17% since July 2011 - when the FTA was implemented - to March 2012, according to commission figures.
At the same time, the number of Korean cars imported in 2011 was only half of what it had been in 2007, prior to the start of the global financial crisis.
De Gucht chalked the car industry's complaints up to the crisis, which has led demand for vehicles to plummet.
"You can expect that when there is an economic crisis, that the European Commission is one of the chosen scapegoats," he said.