WordBulletin

World Bulletin/News Desk

France called on the European Commission on Friday to monitor imports of South Korean-made cars, taking the first step towards triggering a safeguard clause in a free-trade deal that could lead to duties being reimposed.

Since the trade pact came into force in July 2011, France has seen imports of South Korean cars surge while its own carmakers have lost domestic market share to the likes of Hyundai and affiliate Kia, leaving them saddled with massive overcapacity.

France's biggest carmaker, PSA Peugeot Citroen announced plans to close a plant near Paris and cut 8,000 jobs, leaving outspoken Industry Minister Arnaud Montebourg battling to limit the damage and avoid further closures.

Montebourg, who has in the past openly supported protectionism, said last week that imports of small diesel cars had risen 1,000 percent in a year, which he said warranted monitoring and possibly restrictions.

"The surveillance of vehicle trade flows aims to shed light on the extent of bilateral imbalances," the industry ministry said in a statement.

"It makes importers have to obtain a permit from the European Commission before all imports," he added. That allows the European Union's executive arm to determine if imports are indeed strong enough to trigger the safeguard clause.

One of the most ambitious trade pacts the EU has negotiated, the agreement with South Korea includes a safeguard clause which allows the EU to re-impose duties if producers in sensitive industries such as cars are hit by a particularly strong surge in imports.

The pact has long been a major source of concern for European carmakers, with the ACEA industry lobby sounding the alarm about "asymmetrical trade flow relations".

EU Trade Commissioner Karel De Gucht says trade with South Korea benefits Europe overall, pointing to data showing EU exports to the country climbing 16 percent in 2011 from 2010 to 32.4 billion euros ($39.40 billion). That compares to 24.7 billion euros in 2007.