EU Warns On Protectionism In Car Aid Plans

European auto industry association ACEA welcomed the Commission`s report and called for speed in implementing the proposals.

The European Commission warned again against protectionism on Wednesday as six EU countries awaited approval for schemes to support their ailing car industries.

Governments from the United States, Asia and Europe have been pressured to support their carmakers, which have been hit by the economic downturn, falling demand and tight credit. France this month sparked a debate about protectionism by offering a 6-billion-euro ($7.71 billion) state loan to Renault and PSA Peugeot-Citroen in return for a pledge not to close facilities in France.

The EU executive is now scrutinising car support schemes from France, Spain, Britain, Italy, Germany and Sweden, Competition Commissioner Neelie Kroes told a press briefing.

"Protectionism, it is quite clear, is not what the overall industry or the people of Europe need. We must lay down a clear red line in this regard," she said.

Kroes said the single market was not just for selling their cars but also for their production sites.

She said the Commission, which had raised initial concerns that the French scheme may breach single market and state aid rules, was in close contact with the French authorities and would find a solution in the end.

The Commission was also in contact with truckmakers, Kroes said, without providing details.

Asked about troubled carmaker Opel, part of General Motors Corp, Industry Commissioner Guenter Verheugen said aid could only be permitted if it guarantees the long-term survival of the company.

"We hope we can guarantee the long-term survival of the American companies. But I do not believe for one moment that any government can be a better car manufacturer than those that we have already," he said.

The German government is waiting for GM to present a business plan due on Friday before it considers any state guarantees for Opel.

The EU's car industry, with annual sales of 780 billion euros ($1 trillion) and employing 2.3 million people directly and a further 10 million in related sectors, has said production could fall by at least 15 percent this year and carmakers may need as much as 15 billion euros in financial help this year.

The Czech EU Presidency backed the Commission's plans.

"Even at a time of crisis we can only undertake steps that are coordinated and well thought out and at the same time we are not in contradiction with the rules of the game," Czech Deputy Prime Minister for European Affairs Alexandr Vondra said.

European auto industry association ACEA welcomed the Commission's report and called for speed in implementing the proposals.

"What we now ask is to add an early deadline to each suggested measure," it said in a statement.

In a report on the crisis in the European car industry unveiled earlier on Wednesday, the Commission urged auto makers to first address the downturn themselves, saying that state aid should be temporary and adhere to the bloc's state aid rules.