Filed under: Euro, Government/Legal
European Union may complain to WTO over Detroit bailout
The US Congress is contemplating a bailout of $25 billion or more for US automakers, and the European Union is watching closely. European Commission President, Jose Manuel Barroso, told Europe 1 Radio that he is prepared to rat out the US government to the World Trade Organization if the EU considers the bailout illegal.
Barroso wants to look over any aid package to determine if it's "illegal state aid." European new car registrations are down 14.5% in recent months, and we're guessing the EU wants to ensure that any relief the US government may give domestic automakers doesn't afford them an unfair advantage overseas. We aren't exactly sure what the WTO could do to stop aid to the domestics, and it would likely be difficult to prove that state aid would help US automakers in Europe, especially since Ford and GM's biggest issues are here at home.
[Source: Automotive News - Sub. Req. | Photo: Dominique Faget/Getty]
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Reader Comments (Page 1 of 4)
Monkaroo 6:12PM (11/14/2008)
A sign of the beast and its world wide government/economy! The EU wants to try an regulate what we do in our own country...Please!
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The Doctor 6:16PM (11/14/2008)
Oh good, so you accept that with regard to Airbus the US government can take a long walk down a short pier?
Kitko 6:21PM (11/14/2008)
May I suggest that you read the original post again, carefully and pay attention to what you see?
Don't forget that EU and Japanese car manufacturers are now in MUCH better position to influence global automotive markets.
AkulaX1 6:52PM (11/14/2008)
So let me get this straight. US had no problem giving banks (people who rob the very soul of this country) 750 or w/e billion dollars but they are having hard time supporting automaker industry the one that provides jobs for thousands of blue collar folks? FKNG BS that's what it is.
AZZO45b 7:35PM (11/14/2008)
Perhaps someone should remind Mr Barroso that EU members Italy, France & Germany subsidize their "home" automotive companies...
... making it less likely for their governments to ever have to think of "bail outs"(or ask the EU)!!!
Charley Martel 10:54PM (11/14/2008)
@happy penguin
Word.
They went an' gone Buck Wild.
Noidor 12:47AM (11/15/2008)
Okay, but US also gives huge tax breaks/loopholes to Boeing, Lockheed, and other entities closely related to government and military spending. I see EU playing the dirty game, but they're playing the game which US also actively participates in.
Politics at their finest...enjoy
happy_penguin 2:47AM (11/15/2008)
Nice. I got censored for a song reference. Apparently nobody remembers who E.U. was.
Mobius_1 8:04AM (11/15/2008)
Let's not forget a LOT of that 700bn is going into the hands of already very very rich bankers as bonuses at the end of a year in which I think they don't really deserve bonuses as much as some proper economics lessons and maybe a good beating for some.
As for the auto industry, I think GM and Ford will rise up again, maybe with bailouts, maybe with injections and help from overseas divisions, but also likely going through Chapter 11 for a "fresh start". Although the managment teams would need to be refreshed if they want to be competitive. (I'm free ;))
European manufacturers shouldn't be too worried, though, unless the Big ~3 just use bailouts to undercut them, which would be shortsighted, to say the least.
Kitko 6:16PM (11/14/2008)
What the WTO could do?
The WTO could, for example, approve limited import restriction EU might impose on US goods, including cars and parts, should the US bailout go ahead. Or, with a trade war looming, the WTO can force US to adopt temporary import rules that would level up the playing field.
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Level 6:21PM (11/14/2008)
and then the US would do the same in return with their importation of EU products into the US.....this thing is getting better and better by the day lol
Talk about one world order lol....I can just see it now countries putting embargo on other nations and WWIII igniting.....
Kitko 6:29PM (11/14/2008)
Level, again, any dispute would have to be solved at the WTO. Both parties know that a full-on trade war would be damadging to both. In other words, I'm talking about temporary measures. It wouldn't be the first time it won't be the last time.
VW and BMW gropus sold together about 50K vehicles in October in the US, Mercedes added another 15K. Important but not vital numbers.
Temple 8:52PM (11/14/2008)
It should be noted that the US has several WTO complaints against China as well as the EU. The US a few months ago failed a complaint to the WTO on tariff on electronic goods, not to mention the plethora of US complaints against China regarding copying US intellectual property.
At the very least, if US ignored WTO complaints it would lose any legitimacy to utilize the organization to pursue its own agendas overseas. The US files a large number of complaints over any member nation.
tankd0g 6:22PM (11/14/2008)
Nothing rallys the American people like pissing off Europeans. The bailout is a sealed deal now.
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Hugh 6:27PM (11/14/2008)
I was against the autoindustry bailout but, know that the Euro pansies are complaining, I am all for it.
AZZO45b 7:39PM (11/14/2008)
Great logic there... (shakes head)!
:( :( :(
tekd 5:26AM (11/16/2008)
Except I'm pretty sure the Big 3 want a bailout that doesn't cut them off from profitably selling cars in Europe and Asia (China is in the WTO after all). A WTO ruling that really restricts the Big 3 would make the bailout all but pointless since those are the only profitable or near-profitable places where they operate.
tankd0g 8:34AM (11/16/2008)
WTO means very little to the USA, their rulings have no teeth, especially in a case where the products being sold in foreign markets aren't even made in the USA.
MachinaDC5 6:27PM (11/14/2008)
I hope this starts WWIII. The additional production would be nice, plus I think we could take Europe. :P
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StickShift 6:51PM (11/14/2008)
Don't you mean liberate it?