South Korea’s biggest car maker, Hyundai Motor Co, decided to boost its European presence five years ago, adding a family sedan and a sporty-looking crossover SUV to its smaller hatchbacks.
The models have been a hit. European sales jumped 15 percent in the first half of this year, even while overall vehicle sales in countries such as France and Italy showed double-digit falls.
The company’s market share has been growing for 41 consecutive months, said Allan Rushforth, chief operating officer at Hyundai Europe.
That achievement is agitating European car manufacturers and complicating the EU’s ambitious free-trade agenda, just as EU leaders look to trade to revive the continent’s stalled economy.
There is barely a corner of the world where the negotiators from the EU — the largest trading bloc — are not trying to deepen trade ties, and talks with 80 countries are under way, from Canada to Cape Verde.
The immediate target of European carmakers’ discontent is a free-trade agreement between the EU and South Korea that went into force a year ago, heralded by the EU trade chief as “the first in a new generation” of trade deals with Asian countries.
With a Japanese accord next on the EU’s list, these sophisticated deals will go beyond simple tariff reduction and take on intellectual property rights, services and regulation.
However, Europe’s ACEA auto industry association is concerned by “the asymmetrical trade flow relations” between the EU and South Korea — meaning big increases in Seoul’s car exports to Europe, yet only modest export gains for Europeans.
ACEA president Sergio Marchionne, who is also chief executive of Fiat, said South Korea’s increasing car exports were a “warning sign” ahead of a free-trade deal with Japan, Asia’s biggest car exporter.
Marchionne might get backing from affected EU countries, all 27 of which must agree for any free-trade deal to take effect, as they worry about the fate of a struggling industry responsible for 12 million jobs in the EU.
Italy, home of Fiat, along with Volkswagen’s homeland Germany, and France, base for PSA Peugeot Citroen, are those most concerned about a Japanese deal, say diplomats involved in preparing for formal negotiations.
“We cannot sacrifice our car sector in the name of trade,” one Italian trade official in Brussels said.
The executive European Commission, which negotiates on trade matters for the bloc, sees an accord with Japan as crucial, because the EU has yet to sign a free-trade deal with a major world economy.
Talks with India, which began in 2007, are nearing a stalemate over India’s tariffs on imports of European cars that are nearly 10 times greater than Europe’s on Indian vehicles.
Free trade stayed in favor even after the global financial crisis of 2008 to 2009, with leaders aware that protectionism helped convert a crisis into a depression in the 1930s.
Trade is especially important at a time when the eurozone debt crisis has sapped household demand for local goods and unemployment is at a record high.
“If we finalize all the trade deals on the table, it would create 2 million new jobs and increase the EU’s economic output by 2 percent on a permanent basis,” Danish Trade Minister Pia Olsen Dyhr said.
“That’s a 275 billion euro [US$338 billion] contribution to the economy,” she said.
Free trade is complicated by EU plans to coordinate its external policies in areas such as trade, aid and foreign affairs. An agreement with Colombia already signed by EU ministers is being held up in the European parliament, which passed a resolution last month asking Colombia to do more on human rights and labor laws, echoing concerns that held up Colombia’s free-trade accord with the US.
Former EU foreign policy chief Javier Solana said rejection of the agreement on human rights grounds would reduce European influence.
“By engaging with these states, by signing an official accord, we gain better leverage and access,” he wrote last month in the International Herald Tribune.
Brussels dubs its new generation of trade deals “deep and comprehensive,” because they will go beyond the tariff cuts at the center of WTO deals.
The new model includes things like the right of European lawyers to set up shop in third countries, clauses on product safety standards and protection for geographic product indications, such as champagne, Scotch whiskey and Parma ham.
A joint US-EU report last month looking at the possibility of a trade accord between the US and Europe called for tariff elimination — and for harmonization of health and product standards that would mean drugs tested in the US would not need to be tested again in Europe, and vice versa.
Few in Europe question the overall benefits of free trade, but the EU needs to address the damage to specific sectors.
Handbag and apparel makers have reason to be happy with the South Korean deal. Seoul’s imports of bags from EU jumped 35 percent from July 1 last year — when the accord came into force — to June 15 this year, according to South Korea’s finance ministry.
And European perfumers have even raised their prices over the past year due to the popularity of their products: Christian Dior’s J’adore Eau de Parfum is currently on sale in Seoul for 7.6 percent more than last year.
However, struggling French automaker PSA Peugeot Citroen is among those hit hardest by the South Koreans’ sales offensive. South Korean exports, such as the Kia Cee’d compact, have made inroads in France, but PSA models such as the Citroen C4 and Peugeot 308 have recorded sales declines of more than 20 percent at home.
While European carmakers are losing out at home, European auto parts makers complain they cannot get a foothold in South Korea, even with the trade accord. South Korea’s close relationship between carmakers and their suppliers makes it hard for foreign parts makers to break into the market.
“South Korea is a closed market,” said Jean-Marc Gales, head of the Association of European Automotive Suppliers. “You can’t have a free-trade agreement and a closed market.”
EU Trade Commissioner Karel de Gucht said trade with South Korea benefits Europe overall, pointing to data showing EU exports to the country climbing 16 percent last year from 2010 to 32.4 billion euros. That compares to 24.7 billion euros in 2007.
However, the European car industry is beset by overcapacity in a shrinking market damaged by the eurozone crisis.
“It is not because of a rather limited drop in tariffs that all of a sudden the European car market changes, or that argument would be valid for Japan,” De Gucht said. “There are some structural problems with the car market in Europe and carmakers have to address them.”
Hyundai attributes its European success to a mix of aggressive marketing, a plant in the Czech Republic and making the most of national schemes in 2009 to subsidize purchases of low-emission vehicles in Europe, such as Hyundai’s models.
“After the global financial crisis, most Europe-based manufacturers reduced capacity,” Rushforth said. “We still had capacity and could take advantage of scrappage schemes. This gave us a physical presence on roads overnight.”
A series of strong earthquakes in Hualien County not only caused severe damage in Taiwan, but also revealed that China’s power has permeated everywhere. A Taiwanese woman posted on the Internet that she found clips of the earthquake — which were recorded by the security camera in her home — on the Chinese social media platform Xiaohongshu. It is spine-chilling that the problem might be because the security camera was manufactured in China. China has widely collected information, infringed upon public privacy and raised information security threats through various social media platforms, as well as telecommunication and security equipment. Several former TikTok employees revealed
For the incoming Administration of President-elect William Lai (賴清德), successfully deterring a Chinese Communist Party (CCP) attack or invasion of democratic Taiwan over his four-year term would be a clear victory. But it could also be a curse, because during those four years the CCP’s People’s Liberation Army (PLA) will grow far stronger. As such, increased vigilance in Washington and Taipei will be needed to ensure that already multiplying CCP threat trends don’t overwhelm Taiwan, the United States, and their democratic allies. One CCP attempt to overwhelm was announced on April 19, 2024, namely that the PLA had erred in combining major missions
The Constitutional Court on Tuesday last week held a debate over the constitutionality of the death penalty. The issue of the retention or abolition of the death penalty often involves the conceptual aspects of social values and even religious philosophies. As it is written in The Federalist Papers by Alexander Hamilton, James Madison and John Jay, the government’s policy is often a choice between the lesser of two evils or the greater of two goods, and it is impossible to be perfect. Today’s controversy over the retention or abolition of the death penalty can be viewed in the same way. UNACCEPTABLE Viewing the
At the same time as more than 30 military aircraft were detected near Taiwan — one of the highest daily incursions this year — with some flying as close as 37 nautical miles (69kms) from the northern city of Keelung, China announced a limited and selected relaxation of restrictions on Taiwanese agricultural exports and tourism, upon receiving a Chinese Nationalist Party (KMT) delegation led by KMT legislative caucus whip Fu Kun-chi (傅崑萁). This demonstrates the two-faced gimmick of China’s “united front” strategy. Despite the strongest earthquake to hit the nation in 25 years striking Hualien on April 3, which caused