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French auto bailout satisfies Brussels before summit

Latest update : 2009-03-01

The EU Commission was satisfied with French guarantees to work protectionist clauses out of its auto bailout plan on the eve of an informal EU summit in Brussels, where leaders will talk 'G-20'.

AFP - The European Union's competition commissioner on Saturday declared herself satisfied with guarantees from Paris that a French plan to boost its ailing auto sector is not protectionist.

French Secretary of State for Industry Luc Chatel sent a letter to EU Competition Commissioner Neelie Kroes stating that French authorities "have undertaken not to implement aid measures to the automotive sector that would contravene the principles of the internal market," a statement said.  

"In particular, the loan agreements with manufacturers would not contain any condition regarding either the location of their activities or a preference for France-based suppliers.

"I am satisfied with the guarantees set out by the French authorities on the absence of protectionist elements in the plan for aid to the automotive sector," Kroes added.

France this month unveiled measures to support the auto industry, which sparked accusations of protectionism around Europe because of a condition that would force French car makers to retain jobs and assembly lines in France.

French President Nicolas Sarkozy has announced plans to lend PSA Peugeot Citroen and Renault three billion euros (3.9 billion dollars) each and other measures in exchange for a promise not to shut French plants or sack French workers.

The commission warned earlier that the plan might break European Union laws against protectionism amid sniping from the Czech Republic and Slovakia as well as the German industry.

All sides were keen to put the matter to rest before an extraordinary EU summit in Brussels Sunday dedicated to the economic crisis and amid fears over protectionism uppermost among many, particularly the poorer European nations.

"This result shows the importance and the usefulness of a dialogue with the Commission at the planning stage of national aid plans," said Kroes, who has okayed several such plans as Europe sinks into a deep recession.

"It was important for the commission to remove all ambiguity in this case, as Europe must avoid a return to protectionism and its negative consequences for employment in Europe. I am particularly vigilant in this respect," she added.

The Commission stressed that it would "monitor closely the implementation of this plan," to ensure that the non-protectionist assurances are implemented.

Date created : 2009-02-28