France lashes South Korean 'unfair competition' as car industry bail-out announced

Industry Minister Arnaud Montebourg, near Michel Sapin (L), Employment and Social Dialogue Minister, announces the Car industry plan
Industry Minister Arnaud Montebourg, near Michel Sapin (L), Employment and Social Dialogue Minister, announces the Car industry plan Reuters/Remy de la Mauviniere

France on Wednesday accused Korean carmakers of unfair competition as it announced a programme of subsidies to revive the troubled French car industry. The boss of PSA Peugeot-Citroën welcomed the government’s announcement of aid to clean car producers.


Industrial Recovery Minister Arnaud Montebourg accused South Korean auto manufacturers of “acts of unfair competition” that mean that France is “justified in demanding monitoring measures which may enable us to request a safeguard clause” in the European Union’s free trade agreement with Seoul.

Parliamentary elections 2012

The accord, the first such deal between the EU and an Asian country, was signed in October 2010 and promised to eventually do away with 98.7 per cent of duties.

But it contained a get-out clause that would allow a return of some tariffs in the event of “sudden surges of imports” in vulnerable sectors, including small cars.

Hyundai and Kia have become major competitors to France’s PSA Peugeot-Citroën and Renault, whose European sales have fallen, contributing to Peugeot’s 819-million-euro losses in the first half of this year.

Hyundai’s sales in Europe rose 12 per cent last year, while Kia’s went up 11 per cent.

The EU is negotiating a similar free trade pact with Japan, raising further concerns in the industry.

Dossier: Eurozone in crisis

The French government agreed Montebourg’s plan to bolster the flagging car industry on Wednesday, President François Hollande hailing it as “consistent and global”.

As predicted, it increased subsidies for the purchase of electric and hybrid cars, and promised to pay for them by increasing the taxation on sales of high-pollution vehicles.

Peugeot boss Philippe Varin described the aid as an “excellent thing”, which would lead the company to “develop our already-existing models”.

The company produces two electric cars, the Ciitroën C Zéro and the Peugeot Ion, in partnership with Japan’s Mitsubishi, he pointed out.

The plan will also provide aid to companies hit by falling sales in Europe, as well as redirecting existing investment towards research and development.

The only parts that will not be self-financing, according to Montebourg are:

  • 120 million euros to small and medium companies that maintain employment levels;
  • 50 million euros to encourage companies to pool resources;
  • Five million euros in government purchases of electric vehicles.

As promised, there are strings attached – research and development facilities must stay in France if they receive the benefits.

In a final flourish, France’s famous cinéastes are being recruited to the fight to save the French car industry.

Film-makers Luc Besson and Cédric Klapisch have signed up to shoot advertisements promoting it.

“There will be others,” promised Culture Minister Aurélie Filipetti on Wednesday.

Over 1,000 Peugeot workers, who picketed a works committee meeting on Wednesday in protest at the company's plan to shed 8,000 jobs in France, waved  a banner promising Varin, "We will become your nightmare!" on Wednesday morning.

The decline of car production in France
Anthony Terrade/RFI

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