The application by South Korean car maker Hyundai for membership of the European Automobile Manufacturers’ Association (ACEA) has created unease within the industry association, which is adamantly opposed to the free trade agreement (FTA) under current conditions between the EU and Seoul. The ACEA has received Hyundai’s application but has not made a decision yet, a spokesperson told Europolitics. “The application will be judged upon its own merit,” promised the ACEA representative.

The recent move by the South Korean firm has sparked controversy since the ACEA is trying to derail the ratification of the FTA concluded last October, arguing that the text would offer an unfair competitive advantage to Korean car makers. The association is lobbying aggressively the European Commission and MEPs, asking for a renegotiation of the deal. “We think there is room for improvement,” the spokesperson said. “The Korean negotiators have not only obtained unrestricted access to a market of over 500 million people, the Commission has in addition allowed South Korea to subsidise exports from its key industries to the EU,” said Ivan Hodac, secretary-general of the ACEA. Hyundai and its sister company Kia control 80% of the Korean market and have seen their sales in the EU jump last year, at a time when many European competitors where hard hit by the global recession. This trend has continued in the beginning of 2010 and the ACEA fears that the entry into force of the FTA will further boost Hyundai’s market share.

Hyundai’s application aims at defusing this hostility in Europe. “We want to demonstrate our European credentials,” said Allan Rushforth, vice-president for Hyundai Europe. Following in the footsteps of Toyota, Ford and GM, the Seoul-based car maker wants to demonstrate that it will become a ‘good European corporate citizen’. It argues that its plants in the Czech Republic and Slovakia are providing jobs to EU citizens and reduce to nothing the impact of the lifting of tariffs on cars included in the FTA. “We do not expect the FTA to have an impact on our sales within the EU,” Senior Vice-President Sean Kim told Europolitics.

The Hyundai membership bid will be discussed during the ACEA’s next general assembly scheduled for June but the decision could be taken later, said a spokesperson. The issue is likely to split the association that traditionally takes consensus-based decisions. Several members, such as PSA Peugeot Citroën, Fiat or Volkswagen, are fighting hard against the FTA, while others, such as Renault, have shown a more flexible approach.

Background

The EU-South Korea FTA was initialled on 15 October 2009 and is expected to be signed this April.

The ACEA members are BMW Group, DAF Trucks, Daimler, FIAT Group, Ford of Europe, General Motors Europe, Jaguar Land Rover, MAN Nutzfahrzeuge, Porsche, PSA Peugeot Citroën, Renault, Scania, Toyota Motor Europe, Volkswagen and Volvo.