Renault revives protectionism fears
By Nikki Tait in Brussels and Ben Hall and Peggy Hollinger in Paris
Published: March 20 2009 22:04 | Last updated: March 21 2009 01:22
Fears that France’s €7.8bn state aid package for its car industry is protectionist resurfaced on Friday when Renault announced that it was relocating production of one its small cars from Slovenia to a plant in France.
Luc Chatel, the industry minister, told Europe 1 radio that Renault was to “announce the repatriation of the production of one of its vehicles” to an assembly plant in Flins, west of Paris.
The move showed that the French government aid package was “beginning to get results”, he added.
The minister’s comments rang immediate alarm bells in Brussels, where officials fired off an angry letter to Paris asking it to explain the apparent contradiction with French promises earlier this month not to demand preference for French plants, which would breach single market principles.
Neelie Kroes, the European Union competition commissioner, said Mr Chatel’s remarks were “highly surprising”. Mr Chatel had written “to say the loan agreements with manufacturers would not contain any condition regarding either location of their activities or preference for France-based suppliers”, she commented.
Revoz, Renault’s subsidiary in Slovenia, explained that production of the Clio 2 was being mostly moved back to Flins because the plant at Novo Mesto, east of Ljubljana, was at full capacity and would now concentrate on making the Twingo, a small car for which demand has surged.
Revoz indicated its factory was already operating with three shifts and was unable to produce enough Clios.
Borut Pahor, the Slovenian prime minister, gave the green light to Renault’s move, saying it was “completely normal”, but added, “I have to be vigilant.”
Nicolas Sarkozy, France’s president, tried to calm the row, saying the change “would not take a single job from our Slovenian friends”.
Renault’s clarification is likely to reassure the Commission but it will do nothing to dissipate its anger at Paris over its handling of the car industry bail-out. Mr Chatel’s remarks are the latest example of French ministers playing by EU rules when talking to Brussels while also giving their public the impression that French jobs and factories will get preference.
Mr Chatel’s letter, written this month, marked an uneasy truce in a dispute between Paris and Brussels over a €6bn (£8.1bn, £5.6bn) French car industry aid plan, which includes loans to Peugeot and Renault.
Brussels had concerns that aid would be conditional on measures that breached single market rules, by requiring manufacturing activities to be maintained in France or for commitments to be made to French suppliers.
Additional reporting by Joshua Chaffin