Brussels, 25/02/2009 (Agence Europe) - On Wednesday 25 February, the European Commission adopted a communication setting out the Community action framework for the car industry, that has been severely hit by the economic and financial crisis. This framework, which seeks to maintain the single market and respond to member states' expectations on support for the industry, comes at a time when a number of large member states - Germany, Spain, France, Italy, the United Kingdom and Sweden - are preparing aid measures to help manufacturers against a promise that jobs will be retained on their national territory. These measures, especially the French plan to make a €6 billion loan to Renault and PSA, in return for which the two companies undertake not to close any plants in France in the next five years and to make no redundancies in 2009, concern the Commission and new member states which fear an upsurge in economic nationalism. The framework proposed by the Commission will be discussed at the European Council extraordinary meeting on Sunday to debate the crisis, then by the Competitiveness Council on 5 March.
The Commission is still studying the validity of the six large member states aid plans for the car industry, to ensure that they do not contain any protectionist measures or are likely to distort competition with other European manufacturers (Neelie Kroes has promised a response within two weeks). Once again, however, the Commission has warned member states about protectionism, repeating that they have sufficient room for manoeuvre to help the car industry. Commissioners Kroes and Verheugen effectively spoke with one voice on Wednesday condemning all measures of economic nationalism the consequences of which would be damaging for the whole sector. “The car industry is European. There are no more national car manufacturers, only European ones. No company manufactures in only one country. It mustn't be a case of those countries which can take measures for themselves taking them and leaving the others to get on with it,” said the Industry Commissioner. “Supporting protectionism would be the greatest of errors that can be made. We decided to create the single market. It is not a single market simply for car sales, but also for production,” said his colleague at Competition.
The Commission will not, therefore, propose a European plan on the structural changes needed in the car industry, some of the problems of which pre-date the crisis, but it will use the instruments it already has, Verheugen said. “Many great opportunities” are already available to member states to help their national industry, Kroes said. The Commission document contents itself with listing the state aid tools member states can already use and that have been deemed to comply with competition rules, such as premiums for scrapping cars, aid for training workers, aid for “green” investment, R&D aid for innovative vehicles, financial aid and temporary loans in this time of crisis. The Commission has shown willing however, to deepen dialogue between member states and industry players to develop a coordinated and consistent approach. This will be about supervising the resumption of private demand and anticipation of public demand, financial support for R&D and reduction of production overcapacity. The Commission will ensure that competition rules are observed both in the internal market and on third markets. Verheugen has promised that these rules will apply, too, to US measures, with regard to the Obama aid plan for the US car industry.
In its communication, the Commission recommends a proactive approach to support the car industry in its efforts to overcome the crisis and to reduce its effect in the short term and ensure the competitiveness of the sector in the long term. It sets out the various measures available to member states based on the European economic recovery plan of November 2008, which set the basic criteria for public support tot eh car industry. Among these are: - common principles for premiums for scrapping schemes; - the new temporary framework for state aid adopted in December 2008 and revised in February 2009, to allow member states to grant aid to firms having liquidity problems; - aid measures for the manufacture of green products; - aid to financial branches of car manufacturers under the schemes adopted by the Commission for the banking sector; - the European partnership in preparation for change in the car industry, which provides a platform for preparing for and attenuating the social costs of restructuring; - strategic funds and instruments to be used for the social costs of the adjustment and to guarantee that the qualification levels required to ensure future the competitiveness of the industry are maintained in the sector; - the European Social Fund (ESF) and the European Fund for Adjustment to Globalisation.
Lastly, to stiffen the joint response to the crisis, the Commission proposes to strengthen the CARS 21 initiative, launched in 2005, with a round table meeting with member states, the industry and unions, as a platform for mutual information and for exchanging best practice. (E.H./tfl)