EU summit stumbles over Renault protectionism row

AFP - The European Commission will seek an explanation from Paris over Renault's decision to recall some of its production from Slovenia to France, a spokesman said Friday, amid fears of protectionism.

"The commission will ask the French authorities for explanations," said the commission spokesman on competition issues Jonathan Todd.

French Secretary of State for Industry Luc Chatel announced in Paris earlier Friday that Renault is to shift part of its production from abroad to near Paris after receiving state aid in exchange for a promise not to shut French plants or axe French jobs.

Renault last month said its net profits collapsed by 78 percent in 2008 amid a dramatic drop in global demand for cars following the credit crunch. Sales fell 30 percent in the fourth quarter and seven percent for 2008 as a whole.

"What is astonishing in this case, is that the industry minister Luc Chatel made the declaration which would be directly linked to a French automobile plan," said Todd.

That would be in contradiction with the letter he sent to EU Competition Commissioner Neelie Kroes some weeks ago "which said there was no link between car sector aid plans and the localisation of car production," he added.

Renault said in a statement Friday that Clio cars currently produced at the Novo mesto plant in Slovenia would be produced at the Flins plant near Paris from June, saying the move would create 400 jobs.

The carmaker said its Slovenian plant would step up production of the Twingo model. It did not say whether any Slovenian jobs would be affected.