Commission warns against 'economic nationalism'[fr][de] 

Individual companies and their management are primarily responsible for solving the crisis currently facing the car industry, the European Commission said, urging manufacturers to tackle their own structural problems. Despite acknowledging that targeted, temporary and governmental support can help restructure the industry, but should not lead to protectionism, which  would only deepen the crisis.

Competition Commissioner Neelie Kroes confirmed that the EU executive had received national support plans for car manufacturers from France, Germany, Italy, Spain, Sweden and the UK. 

The Commission is now examining their compliance with EU competition rules and assessing their conformity with measures presented by the EU executive in a communication on responding to the crisis in the European automotive industry, adopted yesterday (25 February). As the six member states wait their plans to be given the green light, Kroes stressed that such approvals are never simply "rubber stamp actions". 

In particular, a clause in the French bail-out plan (EurActiv 10/02/09 and 12/02/09) stating that any company receiving state aid should promise not to close its factories in France has caused concern, as it breaks EU rules on the free movement of companies, and could instead lead to the closure of French-owned factories in other EU member states. 

"You can't be a believer in the single market for car sales and on the other hand say 'I'm not a believer in the single market for production'," Kroes said of the French clause, which Paris is about to withdraw, the French press reported.  

Industry Commissioner Günter Verheugen called the current car crisis "politically and economically explosive," as it affects everyone from large and small companies to rich and poor countries. This is because manufacturers produce cars in a variety of countries and have far-reaching supply chains, he explained.

As recession hits and industry struggles to find more funding, Verheugen underlined that time is right to "force through" important changes to remedy the sector's structural problems, which were already well-documented before the credit crunch. 

"The European car manufacturing industry will look very different afterwards," Verheugen added, insisting that the EU is not planning to interfere in companies' restructuring plans and warning member states against doing likewise. "We must not fall into the trap of economic nationalism," he underlined.

The communication adopted yesterday argues that only fair competition in open markets can help to fight the current crisis, "whereas any protectionist measures threaten to deepen it". 

Kroes added that the "car industry does not need state aid" but help in accessing credit. The EU state aid rules allow "well-placed aid" and member states have "a tremendous amount of opportunities" to help the industry, she added. 

Such opportunities include:

• Measures to increase demand, for example, scrapping schemes that do not discriminate against specific manufacturers and using public procurement to renew public transport fleets;
• support for R&D and innovation, and; 
• making use of a new temporary state aid framework adopted last December to help increase companies' access to finance.  

In addition: 

• The European Investment Bank is expected to approve credit applications worth €4 billion for automotive sector projects in March. Other applications in the pipeline could mean that the total value of EIB loans hits €7 billion;
• the financial branches of carmakers may also qualify for aid under schemes adopted by the Commission for the banking sector, and;
• member states are invited to make full use of the European Social Fund and the European Globalisation Adjustment Fund to support the social costs of restructuring.

The Commission's communication showcases an inventory of existing governmental aid measures for the automotive industry sector which do not break EU rules.

"Short-term measures to help car manufacturers must not jeopardise the long-term prospects of the industry as a whole. Even at a time of crisis, we can only undertake steps that are coordinated and well thought out and at the same time are not in contradiction with the rules of the game. In this respect, the Czech Presidency appreciates the role of the Commission as a faithful guardian of these principles, further confirmed by today's communication responding to the request of the Czech Presidency," said Czech Deputy Prime Minister for European Affairs Alexandr Vondra. 

The Commission communication "clearly shows the need for urgent action and lists various options. What we now ask is to add an early deadline to each suggested measure," said Ivan Hodac, secretary-general of the European Automobile Manufacturers Association (ACEA). 

ACEA underlines that the most pressing issue to resolve remains limited access to credit due to the non-functioning of the financial markets. Other immediate needs include fleet renewal incentives and the postponement of further costly regulation, it added.

The International Road Transport Union (IRU) deplored that while governments "give huge financial assistance to banks," they ignore the role of road transport in the overall economy and "only contemplate increasing the tax burden, restrictions and bans on road transport". 

"Put simply, if banks were to cease to exist, trade would continue. However, if road transport were to cease to exist, trade would come to a grinding halt," said IRU President Janusz Lacny. The union thus called for governments to "give top priority to facilitating road transport and reducing the restrictions and unjustified fiscal burden it bears".