Vive Le Protectionnisme!

When France announced their bailout package to the car industry, it came with a covenant: keep jobs in France. This immediately raised the EU’s ire of the EU. Free trade commissar Neelie Kroes spat into the direction of Paris: “If the help comes with conditions, for instance to keep production in France, then these measures would be illegal and would not be approved by us.” After the whipping from mistress Kroes, the Sarkozy government France struck the clause from the bailout package—and then claimed a “ moral obligation” for the French to stay in France. Brussels was displeased with the French moral imperative, especially when Renault is still 15.7 percent in government hands, considering that the government/industry relations in France can put a zaibatsu in Japan, or a company owned outright by the Chinese government, to shame. A wary eye was kept on France ever since. Yesterday, it turned into an angry stare.

“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,” the Financial Times [sub] reports.

It all started with French industry minister Luc Chatel boasting that Renault was to “announce the repatriation of the production of one of its vehicles” to an assembly plant in Flins, west of Paris and that the French government aid package was “beginning to get results.”

Immediately, klaxons sounded in Brussels. Officials fired off an angry letter to Paris asking it to explain the apparent contradiction with earlier French promises. Neelie Kroes found the remarks “highly surprising.”

Then, a backpedaling of Tour-de-France proportions ensued. 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.

Nicolas Sarkozy went public. France’s president claimed the change “would not take a single job from our Slovenian friends.”

Says the FT: “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.”