EU Supports South Korea Trade Pact

BRUSSELS (AP) -- The European Union's 27 nations largely backed a planned South Korea trade pact Friday despite fierce opposition from European car makers, diplomats said.

"Not a single member state opposes this, not one of them is saying stop the negotiations," said an EU diplomat, after EU governments met for the first time to discuss a draft deal. He spoke on condition of anonymity because the issue is sensitive.

Several nations asked for more time to study the compromise text agreed on by EU and South Korean negotiators and sought details on how the EU would treat any increase in South Korean imports that contain parts made outside the country, he said.

The EU's executive commission negotiates deals for all member countries. EU governments set the boundaries for trade talks and must approve any final deal.

EU nations will meet again to resolve details before the EU and South Korea initial a final deal later this year, the diplomat said. That could see the pact formally approved by the end of the year.

European car makers slammed the deal as "unacceptable" earlier this week, claiming it would open the door to cheap Asian imports into Europe as car sales slump.

The trade talks were hindered by differences over refunds South Korea pays to local companies for tariffs incurred on imported parts used in exported goods.

The EU car maker association ACEA -- which represents Volkswagen AG, BMW AG, Fiat SpA and others -- said this unfairly allow South Korean rivals to use cheaper Chinese parts to build cars they can sell for less.

The EU's executive commission rejected that, saying the refunds would be capped permanently if there was a notable increase in imported parts by Korean manufacturers.

EU spokesman Lutz Guellner said many European companies -- including car makers -- want to strike a deal that would give them access to new customers.

The EU says the free trade agreement would eliminate euro1.6 billion in yearly duties for EU exporters and save car makers euro2,000 on each car worth euro25,000.

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