The French government said it "regrets" the European Commission's decision to turn down a request by France to monitor South Korea car imports, after a bilateral trade deal entered into force in July 2011.
France had in August called on the Commission to require South Korea to give advance notice of planned car exports to the European Union. Since a free trade agreement (FTA) entered force in July 2011 a surge of auto shipments to the EU from South Korea has taken place.
Korean car imports into the EU rose by 41% in the year to the end of June 2012. During the same period, the increase in France was 24%, Eurostat data show.
In July, France's biggest carmaker, PSA Peugeot Citroën, announced plans to close a plant near Paris and cut 8,000 jobs. French carmakers are in general losing market share and struggling due to rising competition from, among other producers, Korea's Hyundai and Kia.
The surveillance France sought would have meant authorities could have demanded a document to accompany products scheduled for export to the EU.
On Monday, the Commission sent a letter to France explaining that the French request was based on a provision requiring them to show that imports were concentrated in one or several EU member states and this condition had not been met.
"While it is true that the car sector in the EU, and in particular in France, is going through a difficult period, this cannot be attributed to the entry into force of the EU-Korea FTA," EU Trade spokesman John Clancy said, cited by the Reuters news agency.
The EU-South Korea FTA is seen by the EU as a model for future trade deals. It includes a safeguard clause allowing Brussels to re-impose duties if producers in sensitive industries are hit by a particularly strong surge in imports.
The Commission added that the level of EU car imports from Korea was 37% below their level before the financial crisis and so their rise could be seen as a recovery effect.
The French government said it regretted the decision made by the Commission.
"The Government will maintain a regular dialogue with the Commission on the development of trade with Korea in the automotive industry, particularly in the context of monitoring the sector covered by the agreement," the Minister for Foreign Trade Nicole Bricq and the Minister for Industry Arnaud Montebourg said in a joint statement.
"The government wishes to reaffirm its support for the French automotive industry and reiterates its determination to defend its interests in the European decision-making bodies," the ministers added.
'Buy French' campaign
Meanwhile, Montebourg is behind a new media campaign to promote the "Made In France" brand.
The move by the minister has come as France prepares reforms aimed at restoring lost competitiveness on world markets. President François Hollande's Socialist government is under pressure from employers to cut labour charges in order to make French products less expensive.
EU Trade Commissioner Karel De Gucht said the French minister's protectionist push made no sense as France probably has the most industrial firms among the world's top 500 companies.
"France can't redistribute the global trade cards alone," he said in an interview with French newspaper Le Figaro on Tuesday.
"These firms probably do better overseas than they do in France. So I ask: How do you reindustrialise France with a 35-hour week and without resolving the high wage costs? I don't think Mr Montebourg has much interest in the long-term," De Gucht added.
The EU and South Korea signed a free trade agreement at a bilateral summit in Brussels on 6 October 2010. The deal includes a 'safeguard clause' allowing EU industry and governments to request a re-imposition of duties if surging imports hurt EU producers.
Concerns of EU car makers, particularly those in Italy, were at the heart of the negotiations, which started in 2007.
As part of the deal, South Korea decided to ease domestic rules on CO2 emissions for cars, benefiting large vehicles mainly imported from Germany.
The agreement is the first of a new generation of free-trade agreements that went further than ever before at lifting trade barriers and making it easier for European and Korean companies to do business together.
- DG Trade: The EU-South Korea Free Trade Agreement
- EU-South Korea Trade Agreement: What is surveillance?
- Report: The Economic Impact of the Free Trade Agreement (FTA) between the European Union and Korea
- Fact sheet: Car imports from South Korea (August 2012)
- Eurostat data: International trade in motor car
- Trade and industry ministries: Joint statement on South Korea car imports (23 Oct. 2012)
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