The European Commission has hit back at car makers in connection with the EU-South Korea free trade agreement (FTA), dismissing their harsh criticisms and saying the deal overall benefited the EU economy. «The benefits of Europe’s free trade deal with South Korea are the result of sound trade economics, which show this deal has been good for many different industries as well as for the European car industry overall,» said John Clancy, the spokesman for Trade Commissioner Karel De Gucht. The Commission points out that the EU trade deficit has «significantly» been reduced during the first year after the entry into force of the bilateral deal, last July. Hence, in 2011, EU exports to Korea increased by 16% compared to 2010, while Korean exports to the EU decreased by 8%, creating unease among policy makers in Seoul. «It’s simply too easy for certain car manufacturers to blame the FTA - rather than a lack of competitiveness - for their falling car sales whether in Europe or elsewhere,» added Clancy, asked by Europolitics.

He was responding to comments from Sergio Marchionne, the head of ACEA, the association of European car makers, who had harshly criticised the FTA, saying it had led to a “miraculous” influx of Korean cars into the EU market at the expense of local manufacturers (see Europolitics4444). The number of Korean-made cars imported into the EU rose by 67% to reach 335,320 units between July 2011 and March 2012, according to the Korea Customs Office.

DG Trade downplayed the spectacular increase in Korean exports, saying that many of the Korean-branded cars that are actually sold in the EU are not imported from Korea but produced locally in the EU or imported from third countries, such as India and Turkey, and therefore do not benefit from the elimination of duties included in the FTA.