The free-trade agreement of EU with South Korea is ''damaging'' for the auto industry of Europe, according to Chief Executive Officer Stephen Odell of Ford of Europe who spoke at a conference held by the Society of Motor Manufacturers and Traders in London on Tuesday.
He explained that by removing the vehicle tariffs into the EU for exporting nations, with no or little export potential for the EU in return, it would adversely affect Europe’s vehicle manufacturing.
Specifically, he explained that the deal provides Korean manufacturers with improved market access in Europe, while the European-based manufacturers’ export opportunities are likely to remain strictly limited in South Korea. He further said that there are rumors from Korea about the strengthening of non-tariff trade barriers.
Lawmakers in South Korean passed the free-trade deal with the EU in May. This event clears the last challenge for the second-biggest trade deal in the world to be implemented by July.
The agreement is eclipsed only by the 1994 North American Free Trade Agreement among Canada, Mexico and the U.S. Aside from Ford, other vehicle manufacturers like PSA/Peugeot-Citroen SA and Fiat S.p.A. have raised concerns that the deal could lead to the flooding of cheap Korean-built vehicles in Europe.
Vehicles are the most important export products of South Korea with 2 million of the country's 3 million annual production exported, according to the European automakers association ACEA.
Vehicles built in South Korea control at least 95 percent of the Korean market. According to ACEA, South Korea has the lowest import penetration level of any developed country.