[article] Sarkozy - you EU if you want to (we won't)

mike65

article

French President Nicolas Sarkozy has defended his country's support plan for the automobile sector despite growing criticism from a number of EU states.

Speaking from Kuwait City on Wednesday (11 February), where he is currently on a tour of Gulf States, Mr Sarkozy said the plan had "nothing to do with protectionism."

He continued that other EU states were welcome to put funds into French plants in their markets but that it was his responsibility "to keep jobs in France."

If approved by the European commission, the French plan announced on Monday would provide PSA Peugeot Citroen and Renault €6 billion in loans.

For their part, recipient companies must promise not to close factories or cut jobs in France. The automobile sector currently employs one-in-ten workers in France.

However competition spokesman Jonathan Todd said on Tuesday that the commission had "certain concerns" regarding the deal, adding: "the commission is going to look very closely at the French plan."

"If there is an additional condition such as keeping a production plant in France, that would make the aid illegal," he warned.

As per usual the French political elite talk good stuff about the Eu and practice something quite different.

Hitman Actual

mike65 wrote: »

article
As per usual the French political elite talk good stuff about the Eu and practice something quite different.

It's not all that dissimilar to the bank-bailouts initiated in other parts of the EU; it's just a state-aid rescue package. And it hasn't been approved by the Commission yet. If it is proven to be protectionist and damaging to other EU MS's, and yet still gets approved by the Commission, then by all means call shenanigans on the EU/Sarkozy (and I'll be joining you). But at the moment there's nothing really of substance there.

limklad

Hitman Actual wrote: »

It's not all that dissimilar to the bank-bailouts initiated in other parts of the EU; it's just a state-aid rescue package. And it hasn't been approved by the Commission yet. If it is proven to be protectionist and damaging to other EU MS's, and yet still gets approved by the Commission, then by all means call shenanigans on the EU/Sarkozy (and I'll be joining you). But at the moment there's nothing really of substance there.

There is a big difference between financing Car companies and Banks. Everybody need banks for loans, saving, everyday trading, etc in Europe. Current Government Finance proposals cover every banks to prevent distortion in the eurozone market and to Stabilize the Eurozone. Banks supply loans to each other and are very much inter-linked more than we realise and Banks are often each other big customers. So here in Ireland, the Irish government providing assistance to Irish Banks are keep the Finance market oil for now, so you and me can (supposedly) gain access to funds to buy goods from other EU markets. So If I got a loan from AIB, AIB could have got that loan from a UK/German/French bank, therefore me paying back the loan supply them with more money through interest, they are all gaining from the Loan to me.

Not everybody in Europe needs cars and most countries have good public Transport, except Ireland (of course). If the French put money into their car industries that will reflect on UK, Germany, Italy, Sweden and Spain car industries more than here in Ireland (We do not make cars). Car companies are competing with each other more aggressively than Banks, while car companies may use similar suppliers, they still are in competition. So If i buy a Ford car in the morning, Citron,BMW,VOLVO,Peugout, etc does not benefit from my purchase.

P.S. By the Way I am in favour of Kicking the Bank Managers out of a job deduct their Large bonuses for getting us into the current mess in the credit crises through bad property deals.

Scofflaw

limklad wrote: »

There is a big difference between financing Car companies and Banks. Everybody need banks for loans, saving, everyday trading, etc in Europe. Current Government Finance proposals cover every banks to prevent distortion in the eurozone market and to Stabilize the Eurozone. Banks supply loans to each other and are very much inter-linked more than we realise and Banks are often each other big customers. So here in Ireland, the Irish government providing assistance to Irish Banks are keep the Finance market oil for now, so you and me can (supposedly) gain access to funds to buy goods from other EU markets. So If I got a loan from AIB, AIB could have got that loan from a UK/German/French bank, therefore me paying back the loan supply them with more money through interest, they are all gaining from the Loan to me.

Not everybody in Europe needs cars and most countries have good public Transport, except Ireland (of course). If the French put money into their car industries that will reflect on UK, Germany, Italy, Sweden and Spain car industries more than here in Ireland (We do not make cars). Car companies are competing with each other more aggressively than Banks, while car companies may use similar suppliers, they still are in competition. So If i buy a Ford car in the morning, Citron,BMW,VOLVO,Peugout, etc does not benefit from my purchase.

That's well put. I would agree that Sarkozy's proposals aren't really anything like the bank bailouts. I'd also agree that it's a strong test of the EU's fairness whether those subsidies are allowed to go ahead - if they are actualiy damaging to competitiveness. It's worth pointing out that grumbling from other countries is not necessarily proof of their damaging nature, though - the UK banking sector complained very loudly about our bank guarantees.

cordially,
Scofflaw

Hitman Actual

limklad wrote: »

There is a big difference between financing Car companies and Banks. Everybody need banks for loans, saving, everyday trading, etc in Europe. Current Government Finance proposals cover every banks to prevent distortion in the eurozone market and to Stabilize the Eurozone. Banks supply loans to each other and are very much inter-linked more than we realise and Banks are often each other big customers. So here in Ireland, the Irish government providing assistance to Irish Banks are keep the Finance market oil for now, so you and me can (supposedly) gain access to funds to buy goods from other EU markets. So If I got a loan from AIB, AIB could have got that loan from a UK/German/French bank, therefore me paying back the loan supply them with more money through interest, they are all gaining from the Loan to me.

Not everybody in Europe needs cars and most countries have good public Transport, except Ireland (of course). If the French put money into their car industries that will reflect on UK, Germany, Italy, Sweden and Spain car industries more than here in Ireland (We do not make cars). Car companies are competing with each other more aggressively than Banks, while car companies may use similar suppliers, they still are in competition. So If i buy a Ford car in the morning, Citron,BMW,VOLVO,Peugout, etc does not benefit from my purchase.

Okay, I can't really argue with that, and when you put it like that it really will be interesting to see how the Commission rules.

limklad

Hitman Actual wrote: »

Okay, I can't really argue with that, and when you put it like that it really will be interesting to see how the Commission rules.

If Germany and other Car manufacturing countries do not bailout their car companies, then I would expect the EC to rule against France for breach of EU competitions rules for distortion of the Eurozone market as all car manufacturing companies are in trouble right now.

Scofflaw

limklad wrote: »

If Germany and other Car manufacturing countries do not bailout their car companies, then I would expect the EC to rule against France for breach of EU competitions rules for distortion of the Eurozone market as all car manufacturing companies are in trouble right now.

Well, no, that's not how it works. Governments are entitled to give industry subsidies without that being considered a distortion.

“If there were any conditions, which would mean that aid would be subject to conditions that violated the principles of the internal market, then the aid would be deemed to be illegal and the Commission would not tolerate that.”

Under the plan unveiled on Monday the French Government would make loans to the two carmakers over five years at 6_per cent interest in return for a pledge not to close sites for the duration of the loan. It would have to comply with EU law on the single European market, which guarantees companies the right to do business wherever they want.

Payments to the car sector would become illegal “if additional conditions apply like the obligation to keep production centres in France”, Mr Todd said.

There's a lot of claims made that things are 'distortions of the single market' which have no basis in anything other than someone's feeling that those things are "unfair". There is nothing about the bailout per se that represents distortion of competition, because it is a loan. That is not a subsidy in the same way that, say, Declan Ganley's loans to Libertas are not characterised as donations.

cordially,
Scofflaw

limklad

Scofflaw wrote: »

Well, no, that's not how it works. Governments are entitled to give industry subsidies without that being considered a distortion.

It is when the French government is putting in conditions to prevent closing of Factories and preventing Job Losses. For example Peugeot have plants in other EU countries and with the Dramatically reduce sales, Peugeot may decide which Plant in the EU should Peugeot close or have mass layoff? If they accept French Government money and conditions, then they immediately put their Czech Republic plant under pressure to let go workers there or to close that plant. That will distort the EU market and distort competition.

Scofflaw

limklad wrote: »

It is when the French government is putting in conditions to prevent closing of Factories and preventing Job Losses. For example Peugeot have plants in other EU countries and with the Dramatically reduce sales, Peugeot may decide which Plant in the EU should Peugeot close or have mass layoff? If they accept French Government money and conditions, then they immediately put their Czech Republic plant under pressure to let go workers there or to close that plant. That will distort the EU market and distort competition.

Yes, I haven't argued that, though:

Scofflaw wrote:

There's a lot of claims made that things are 'distortions of the single market' which have no basis in anything other than someone's feeling that those things are "unfair". There is nothing about the bailout per se that represents distortion of competition, because it is a loan. That is not a subsidy in the same way that, say, Declan Ganley's loans to Libertas are not characterised as donations.

Just to reiterate - there's nothing about the bailout itself that's a distortion, but if such conditions are attached, then sure.

cordially,
Scofflaw