States must use existing tools

Publication date: 26 February 2009

States must use existing tools

Those who were hoping for a European aid plan for the automotive industry will be disappointed. The communication adopted by the European Commission, on 25 February, on ‘Responding to the crisis in the European automotive industry’ is not a real aid plan comparable with that put in place in the United States, for example. As expected – Enterprise and Industry Commissioner Günter Verheugen has been clear on this in recent weeks – the Commission is not announcing any new aid for the sector, harmonising the systems in place or to be put in place, or forcing member states to put in place this or that type of aid. That falls to national powers. Taking the scrap premiums as an example, currently in place in nine member states (Austria, Cyprus, France, Germany, Italy, Luxembourg, Portugal, Romania and Spain): “We can’t force this to be done,” explained Verheugen, for there can not be European rules “regarding the amounts” (currently these premiums vary between €257 and €2,500, depending on the state). Nor does the Commission want a “European plan on the industry’s structural changes,” deemed necessary, moreover, by the very same commissioner – structural changes, not the European plan that is.

This communication is above all a reminder of the tools available to member states to support the sector (the flexibility allowed for state aid, the credit facilities from the European Investment Bank, support schemes on demand, state guarantees, restructuring aid) and detailed explanations about what is and is not considered state aid (and therefore about what needs to be or need not be approved by the Commission). There are also guidelines that member states are asked to respect if they decide to put in place scrap premium schemes. And as such – and the Commission has said it often enough in recent weeks – these systems must
be non-discriminatory: not favour the sale of vehicles from national manufacturers and not be based on characteristics that discriminate against vehicles from other member states. They must be linked to the real scrapping of old cars (these cannot be put back into circulation). They can be linked to special environmental features (for example CO2 emissions) but without discriminating against the origin of the vehicle.

RED LINE FOR PROTECTIONISM

No to discrimination, no to protectionism. That was the main message that Commissioners Günter Verheugen and Neelie Kroes (competition) tried to convey in their presentation to the press. Clearly a reference to the controversy raging over the discriminatory nature of the aid schemes adopted by states, such as France, Italy and Spain. “We must lay down a clear red line” regarding protectionism, Commissioner Kroes said, while her colleague Verheugen considered it “only possible to emerge from the crisis if we think and act in a European way”. The European Automobile Manufacturers’ Association (ACEA) politely called it a “welcome step,” but above all is waiting for the member states to quickly seize the options made available to them. A political message of this type would be welcomed by the informal European Council, on 1 March. And if ACEA is pleased with the Commission’s commitment to “avoid new technical rules that would represent an additional burden” – said Commissioner Verheugen – it must assume responsibility with its request to increase EIB loans for the automotive sector to €40 billion. The Commission’s communication will be presented at the informal European Council of 1 March and at the Competitiveness Council, on 1 March in Brussels. No doubt this document will be a touch too little for the industry, which is awaiting more “palpable” measures.

Source: Europolitics