BRUSSELS – EU Competition Commissioner Neelie Kroes warned Paris on Wednesday that any aid for the French car sector must not be protectionist.

"It would not be in the interest of France, of French car makers or of any member state to see a resurgence of protectionism in Europe," she said in a statement after a meeting French state secretary for industry Luc Chatel.

"Raising barriers within Europe cannot be the way out of this crisis and we need to make that clear," she added.

Earlier in Paris, Chatel said that French President Nicolas Sarkozy would ask companies in the car industry which receive state aid to "commit to making investments and locating production plants in France".

Earlier this week, the Financial Times reported that Paris would ask car companies that receive state aid to buy only French-made parts, which fuelled concerns in the European Commission of protectionism between EU countries.

Kroes told Chatel that forcing aid beneficiaries to invest only in France or source parts only in France "would be contrary to EU state aid and single market rules and would run the risk of a return to protectionism".

According to the commission statement, Chatel stressed in the meeting that the planned measures "would not be protectionist and would respect France's obligations under (EU) law, including single market rules".

Like a number of other EU countries, France is working on a package to help European carmakers cope with slumping demand, which is supposed to be worth up to EUR 6 billion.

The European Union's current Czech presidency called for EU-wide measures to stimulate demand for new cars in order to avoid competition distorting discrepancies from one country to another.

"We should ensure a level playing field within the internal market," Czech Deputy Prime Minister Alexandr Vondra told lawmakers at the European Parliament in Strasbourg.

"The Czech presidency would like to ask the European Commission to come immediately with a proposal on how to encourage, in a coordinated manner, a European car fleet renewal in the area or vehicle recovery and recycling," he said.

[AFP / Expatica]