On September 28, the European Automobile Manufacturers’ Association (ACEA) released an open letter to the European Union member states (EU-27), demanding that the European Commission should improve the conditions of the upcoming free trade agreement (FTA) with South
Korea and ensure a more transparent process for all stakeholders.
According to the ACEA, the free trade agreement will have a significant impact on jobs and competitiveness in the EU economy. The ACEA, informed that the agreement is to be effective as of October, expresses the view that it would be wrong to rush into signing a bad agreement.
Automotive is the largest component in the EU-South
Korea trade relationship, representing 14 percent of the total EU-South
Korea trade volume, with 17 percent of all South Korean exports to the EU consisting of cars. EU car exports represent four percent of total exports to South
Korea. The EU-27 has consistently had a trade deficit with
Korea: €14.8 billion in 2007, €19.9 in 2006, €14.2 in 2005, €12.7 in 2004. Of the trade deficit, 40 percent stems from the disequilibrium in
automotive trade between the two sides.
According to the ACEA, for South
Korea,
automotive is the center piece of the FTA. Automobiles are the most important export product of the South Korean economy. The South Korean car industry is focused on exports, with a
production of 3.5 million cars per year, of which 2.5 million (73 percent) are exported. By contrast, 80 percent of cars produced in the EU are also registered in the EU. The EU is a key target market for Korean manufacturers, with 700,000 cars in 2007, or 20 percent of all EU car imports, and an average 10 percent annual growth between 2000 and 2007. Due to the economic crisis, 2007 is a better reference year than 2008.