Friday February 20, 06:06 PM
EU auto sector drives into protectionism row
BRUSSELS (AFP) - The European Commission, increasingly concerned about protectionist tendencies in member states, has asked France, Spain and, on Friday, Italy to justify their auto sector aid packages.
The EU's executive arm has "some concerns" over Italy's plan to aid its ailing auto sector and was writing to Rome Friday to seek more details, a spokesman said Friday.
"The commission will write to the Italian authorities today asking them to provide precise details on the measures within five working days," he added.
One particular area of concern is that the government help seems to be available only to businesses that sign a protocol with the government, he said.
Such aid "could be discriminatory" against companies who do not want to sign "and in that case it would be state aid because it would be selective" and threaten the free circulation of goods, he added.
A number of EU governments are planning or considering measures to help the European automobile industry, which saw the weakest sales in 15 years in 2008 with new car registrations plunging eight percent.
Italian Prime Minister Silvio Berlusconi announced this month new measures worth 2.0 billion euros (2.6 billion dollars) to boost the economy and help the auto industry, but he tied the aid to keeping factories at home.
Italy swiftly defended its plans.
The measures the government plans to take to support the Italian auto industry "are absolutely not discriminatory," Andrea Ronchi, Italy's minister for European affairs said in Rome.
Brussels, along with several EU nations, had already asked questions about the French auto plan, and has also asked Spain for details of its measures.
The French proposals in particular have been met with the protectionist tag.
President Nicolas Sarkozy has announced plans to lend PSA Peugeot Citroen and Renault (Paris: FR0000131906 - news) 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.
"If you build a Renault plant in India to sell Renaults to Indians (INDN.PK - news) , that's justified, but if you build a factory, without saying the company's name, in the Czech Republic to sell cars in France, that's not justified," Sarkozy said early this month, provoking outcry in the Czech Republic which currently holds the EU's rotating presidency.
Last Friday, Spain's socialist government said it would allow auto makers to put off paying social security contributions in 2009 as part of measures to help the sector deal with plunging sales.
The government in Spain, Europe's third-biggest car producer after Germany and France, will also extend the period an unemployed auto worker can receive jobless benefits, boost spending on training and lower social security payments to auto plants that improve their safety record.
That was enough for Brussels to fire off another letter.
"We have no problem at all with member states giving support to their car industry" as long as it complies with rules governing state aid and Europe's single market, a Commission spokesman explained.
Europe's biggest car industry in Germany is also crying out for help.
However Chancellor Angela Merkel said this month that any aid to the sector must comply with competition law.
She added that the issue would "certainly" come up for discussion at an axtraordinary summit of EU leaders in Brussels on March 1 called by the Czech EU presidency.
EU Competition Commissioner Neelie Kroes, who has a reputation as a fierce free trade champion, this week took aim at countries which seek "to steal jobs from their neighbours."
In December the commission temporarily eased rules for government support of struggling companies after coming under fierce fire from member states for applying them too strictly in the midst of financial crisis.
The auto debate mirrors differences last year when the first wave of national economy bailout measures concentrated on the imploding banking sector.
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
