France wants to check if U.S. car aid fits world trade rules

Automotive News | February 27, 2009 – 4:00 am EST

SAINT-VULBAS (Reuters) — France wants U.S. aid to the car sector to be checked to see if it fits World Trade Organization rules, President Nicolas Sarkozy said, escalating tensions over rival industrial policies.

Sarkozy, who has announced aid for French automakers that critics have called protectionist, also said he would ask for a coordinated European plan to help the car industry.

"We need to see if the U.S. aid is compatible with the WTO," Sarkozy said at a roundtable discussion in eastern France on the car industry on Thursday.

Leaders of the European Union will meet in Brussels on Sunday to discuss coordinating responses to the financial crisis and Sarkozy said he would ask for an EU-wide car plan.

Europe’s automakers have warned that the region’s car producers might need up to 15 billion euros in financial help during the economic crisis.

EU competition authorities are scrutinizing car industry support from governments in France, Spain, Britain, Italy, Germany and Sweden.

Earlier this month Sarkozy faced criticism from his EU allies for a 6 billion euro ($7.64 billion) state loan offered to Renault and PSA/Peugeot-Citroen in return for an unwritten pledge not to close production sites in France.

Separately, European Transport Commissioner Antonio Tajani said Europe’s lawmakers would consider appealing to the WTO if U.S. aid made conditions unfair for European manufacturers.

Europe is evaluating appealing to the WTO if the U.S. auto bailouts "should impinge on the competitiveness of our producers," Tajani told the Italian paper La Stampa.