Car Market Opening
European carmakers on a roll in the Korean market demanded to President Park Geun-hye, who is paying a state visit to European countries, that Korea further open the market. Their Korean counterparts reacted strongly against the call.
The Association of European Vehicle Manufacturers (ACEA), European Association of Automotive Suppliers (CLEPA), and European Tyre & Rubber Manufacturers Association (ETRMA) released a joint statement on November 7 (local time) and said, “On the night before the summit talks between the EU and Korea, we ask the Korean government to take more measures to remove the trade barriers in the Korean automobile market.”
They continued, “Our access to the Korean market has been limited due to the non-tariff barriers that have been in effect or newly created in recent days, and the European Commission and the governments of EU member countries have to take urgent measures to lift the trade barriers.”
They did not mention specific examples of the trade barriers, but industry insiders are saying that these include the certifications and inspections that imported cars have to go through before landing in the Korean market. These days, the tariff barriers are being removed in the wake of the conclusion of a two-way FTA.
At present, European cars exported to Korea have to clear the certification processes regarding exhaust gas emissions, fuel efficiency, and the like, even if they meet EU standards, due to the different environmental regulations here. In addition, exhaust gas regulations limit the sales volume of the vehicles with an engine displacement of 2,000cc or less to 1,000 units per brand per year, and the Korean government is imposing rather strict restrictions concerning smart keys and the like for the protection of the local industry as well.
Korean carmakers are opposed to the call. “No less than 102,219 European cars have been sold in Korea during the first 10 months of this year alone, to account for over 78% of total imports,” said an industry source, adding, “It is not appropriate that European carmakers such as BMW, Volkswagen, and Mercedes Benz, which are enjoying a much greater market share than their American and Japanese counterparts, claim that the barriers be lifted.”
Korean automakers are subject to some discrimination in the European market, too. “The EU is demanding that the United Nations Economic Commission for Europe’s environmental safety certification mark, known as the E Mark, be recognized in the Korean market, while not recognizing the Korean government’s certification for the same purpose,” said another industry expert, continuing, “In the meantime, Korea is recognizing the EU’s standards in at least 32 categories.”
It is pointed out that such strong requests are based on the European automakers’ efforts to keep Hyundai and Kia at bay. “Hyundai and Kia successfully penetrated the European market, while the local carmakers stumbled during and after the recent financial crisis in Europe,” said an economist, predicting that their pressure will keep mounting as the popularity of Hyundai and Kia increases in Europe.