* EU carmakers oppose 100 bln euro South Korea trade pact
* Trade chief holds talks with diplomats Friday
* EU carmakers: Korean imports to rise by up to 200,000 p/y
By Darren Ennis
BRUSSELS, March 4 - Europe's carmakers said on Wednesday they will "fight until the bitter end" to derail a 100 billion euro ($125.4 billion) free trade agreement between the EU and South Korea unless the bloc's trade chief addresses their concerns.
EU Trade Commissioner Catherine Ashton wants to initial a trade pact with Seoul next month, however many EU countries are concerned that cutting import tariffs on Korean cars could severely damage Europe's auto industry which is struggling to cope with the worst financial crisis in nearly 80 years.
Ashton will hold crunch talks on Friday with senior trade officials from the 27-nation bloc in a bid to get the go-ahead to write a provisional deal with Korea -- which started talks with Brussels in 2007 shortly after striking a trade pact with the United States.
However even if Ashton manages to persuade diplomats of the merits of the overall deal, Ivan Hodac secretary general of the European Automobile Manufacturers Association (ACEA) said his organisation will attempt to prevent a permanent agreement.
"We will continue opposing this deal until the bitter end," he told Reuters in an interview.
"We will continue to talk to member states and convince them this is not good for the EU economy and car industry. There is still strong opposition from the industry and a number of member states are in doubt or against the deal," Hodac said.
"There are certainly more against the deal than a year ago as many ask the question: what does it mean for the EU, and especially the car industry."
DUTY DRAWBACK
The EU's auto industry -- employing 2.3 million people directly and a further 10 million in related sectors -- has said production could fall by at least 15 percent this year due to the financial crisis.
South Korea's car industry has also been hit by the global downturn, with Hyundai planning to cut production at its domestic plants by 25 percent to 30 percent in the first quarter, while Kia also expects to cut output.
For the European Union, a deal to lower barriers to trade and investment with South Korea would be its first such pact in Asia. However Hodac said the current deal -- which would end the 10 percent EU import duty on Korean cars -- is "totally unbalanced".
"What is being offered to us has no balance whatsoever. Under the deal the European market is completely open and they (Korea) will get the benefit. Even with the measures that will be taken on our side, we don't believe the Korean market will be open to us," he said.
Around 600,000 Korean-made cars were imported into the EU in 2008. ACEA estimates that this figure will rise by between 150,000 and 200,000 per year under the proposed free trade deal.
Europe's carmakers and many EU governments are also angry with Ashton's plan to allow Korean car manufacturers to take advantage of so-called "duty drawback".
Under this system, Korean carmakers could import cheap components from China and have all import duties paid on those parts reimbursed if they are exported in cars destined for the EU market.
Duty drawback is worth between 300 and 500 euros per vehicle to a Korean manufacturer, ACEA said.
Brussels has proposed a transition period of three to five years to allow the EU's auto sector to adjust, however ACEA wants this extended to nine years.
"This deal could set a precedent for further free trade agreements with India, Japan and China which would hugely damage Europe's economy," Hodac said. ($1=.7977 Euro) (Editing by Sharon Lindores)