Sun, Feb 08, 2009 - Page 11 News List

Sarkozy under fire across Europe for ‘protectionism’


French President Nicolas Sarkozy drew fire on Friday from fellow EU states that accused him of protectionism and irritated his ally the UK with comments he made defending his economic crisis strategy.

In a lengthy televised interview late on Thursday, Sarkozy suggested French car groups should keep factories at home in exchange for government help and should even bring back production from overseas.

He also contrasted the UK’s economic predicament with France’s and dismissed a sales tax cut by British Prime Minister Gordon Brown.

“The attempts to use the financial crisis to introduce such forms of protectionism and protective measures may slow down and threaten the revival of the European economy,” Czech Prime Minister Mirek Topolanek said on behalf of the EU’s rotating presidency.

In his comments, Sarkozy singled out manufacturing by French car groups in the Czech Republic in particular, saying it was unacceptable for groups to build plants there to supply the French market.

“As the prime minister of the Czech Republic, I do not understand the argument that it is unjustifiable for French car companies to manufacture cars for the French market in the Czech Republic,” Topolanek said. “In my opinion it is a completely legitimate and voluntary decision of these companies as well as a fulfillment of one of the principles of the principles of the internal European market.”

The founding treaties of the EU allow member states to benefit from the free movement of goods and services, including the relocation of labor and production.

In Slovakia, Slovak Economy Minister Lubomir Jahnatek also criticized Sarkozy’s comments, calling his remarks “counterproductive.”

“It would be very bad if EU member states started to take certain protectionist measures,” he said.

Car production is the driving force of the economy of Slovakia, which has drawn investment by Germany’s Volkswagen, South Korea’s Kia Motors and France’s PSA Peugeot Citroen.

In the Czech Republic, the car industry accounted for about 18 percent of Czech GDP in 2007.

Britain meanwhile defended its emergency cut in value added tax (VAT) against Sarkozy’s criticism, in an exchange that ran counter to a recent warming of relations between Sarkozy and Brown.

Sarkozy had dismissed a controversial VAT cut in Britain as having “made absolutely no difference,” adding that “consumption in England has not only not recovered, it has continued to shrink.”

Brown’s spokesman told reporters, with clear irritation, that Sarkozy’s office had “been in contact this morning to assure us that these remarks were not meant as a critique of UK economic policy — which is nice.”

Also on Friday, Italian Prime Minister Silvio Berlusconi announced measures worth 1.2 billion euros (US$1.55 billion) to help the auto industry, but he too tied the aid to keeping factories at home.

In return for financial incentives for consumers to buy cars and other goods, Berlusconi called on the auto industry to keep its plants “in Italy, to invest in new products and to keep up payments to components suppliers.”

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