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France Says Auto Bail-out Not Protectionist

Motor manufacturing is a pillar of French industry, directly employing one in 10 members of the workforce.

France on Feb. 11 fiercely defended its plan to pump almost nine billion euros into its struggling carmakers after EU countries labeled it protectionist and called a crisis summit. President Nicolas Sarkozy announced plans to lend PSA Peugeot Citroen and Renault three billion euros (US$3.9 billion) each on top of other measures in exchange for a promise not to shut French plants or sack French workers.

In total Sarkozy proposes six billion euros in five-year loans, two billion more for Renault and Peugeot's financial arms, 600 million for suppliers and around 220 million in grants for motorists who replace older cars.

Speaking in Kuwait City during a tour of Gulf states, Sarkozy said the plan had "nothing to do with protectionism" and that other European governments were welcome to put up funds to keep French plants in their markets. "One million cars were built elsewhere than in France in three years," Sarkozy told a news conference. "It is my responsibility to keep jobs in France."

The European Commission, which has yet to give the loan its approval, warned on Feb. 11 that the plan might break European Union laws against protectionism, amid sniping from the Czech Republic, Slovakia and German industry. The Czech presidency of the European Union has called for a summit at the end of the month to encourage leaders to "say a clear 'no' to protectionism".

Minister for European affairs Bruno Le Maire joined the chorus, saying the bailout plan was "not protectionism, it's the defence of our industry and the defence of our jobs."

Motor manufacturing is a pillar of French industry, directly employing one in 10 members of the workforce, but the sector has been hard hit by the global economic crisis and the collapse of consumer credit.

Paris sees Renault and Peugeot as national champions, although they only produce around 40% of their vehicles at home, running major plants in Spain, Italy, Romania, Portugal, Slovakia and the Czech Republic.

Copyright Agence France-Presse, 2009

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