France No Friend To Protectionism Says Minister

The Brussels-based Commission has already raised reservations over the five year timeframe for the loans.

France is opposed to protectionism and does not believe its auto sector rescue plan, criticised by some European Union allies, runs foul of EU competition rules, Industry Minister Luc Chatel said on Friday.

Chatel told Reuters he expected the European Commission would make a swift decision on the package, which offers cheap loans to France's two main carmakers in return for guarantees they will not close French-based factories.

"We continue to say these measures are not protectionist... This plan doesn't only help French companies but non-French ones which are producing cars in France or involved as suppliers," he said in a telephone interview.

France's plan has drawn stinging criticism from some fellow EU members, especially after President Nicolas Sarkozy suggested French car makers should move production back home from countries like the Czech Republic.

Government ministers in Paris have denied this amounted to protectionism and Chatel said there was no place for such a thing, even in times of crisis.

"I think it is the worst of phenomena. We remain opposed to it," he said.

The European Commission is studying the French scheme, which involves giving PSA Peugeot-Citroen and Renault 3 billion euros ($3.9 billion) each in loans and doubling a fund to support struggling auto suppliers.

The Brussels-based Commission has already raised reservations over the five year timeframe for the loans and on efforts to ring fence the French-based factories.

But Chatel said he could not envisage them blocking the deal, adding that a rapid decision was vital.

"We expect a quick response because the automobile sector is in a critical condition and cannot wait. There is a real need for speedy action," he said, stressing that Paris had drawn up its plan following close contact with Brussels.

"One cannot accuse France of having made its decisions and proposing its plan on the quiet," he added.