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20th Jan 2019

Italy threatens to veto South Korea trade deal

  • Italy fears European car makers will not have enough time to prepare for opening of the European market to South Korean industry. (Photo: EUobserver)

Italy is prepared to block a free trade agreement (FTA) between the EU and South Korea unless it gives European carmakers a year to prepare for the lowering of trade barriers. Meanwhile, the European Parliament is flexing its new legal muscle on the deal.

"We have asked for changes, especially for the auto sector, but unfortunately our suggestions were not accepted," the Italian junior minister for trade, Adolfo Urso, told AFP on Tuesday (7 September).

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He doubted the necessary changes would be made before a vote by trade ministers on Friday in which all 27 EU member states have to agree the deal.

The FTA ends import barriers for South Korean cars in the EU in either three years (for high and medium-powered vehicles) or five years' (small cars) time, causing alarm in major car-producing EU countries.

Opponents of the treaty say it offers too many concessions to Korean companies in the area of duty drawbacks, a mechanism under which Korean companies can claim back EU import duties on car components purchased in third countries.

Meanwhile, the European Parliament decided on Tuesday to postpone its final vote on a separate part of the FTA, a bilateral safeguard clause, which aims to protect vulnerable European companies.

The parliament, which in a new development under the Lisbon Treaty holds the role of co-legislator on trade pacts, at its September session approved a report from the international trade committee concerning the safeguard mechanism, but did not want to vote in plenary before it has reached a compromise with member states.

Pablo Zalba Bidegain, the Spanish centre-left rapporteur, said in a debate on Monday that there is already partial agreement with member states and the commission on the issues of creating an online platform for sharing information and the possibility for industry to trigger an EU investigation into breaches of the pact.

He added the commission should be obliged to make an annual report on the application and functioning of the safeguard clause and to monitor trends in exports and imports between Korea and the EU.

But MEPs and member states have not yet agreed on the so-called regional clause, enabling special protection of European firms in regions with high unemployment, for example. The question of Parliament's right to initiate an investigation also remains to be settled.

For his part, trade commissioner Karel De Gucht on Monday said he had warned Seoul that its draft measures on CO2 emissions could hamper the import of European cars. The commissioner said he "made it very clear ... that if this is not satisfactory, it's a no-go for us in Europe."

He voiced hope the trade ministers will on Friday authorise a signature and provisional application of the FTA, adding that once the decision is taken, it would be possible to initial the agreement and transmit the text to parliament for its consent.

The idea did not go down well with MEPs, however.

"I would say that you cannot have any kind of preliminary introduction as long as you have not made sure that the parliament has taken its decision on the matter," centre-left German deputy Bernd Lange said. "It would make perfect sense for the European Parliament to have equal rights vis-a-vis council when it comes to these kinds of agreements."

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