EU Concerned About Renault Production Move

European Union asked France to explain the decision of car maker Renault SA to move excess production from its Slovenia plant to France.

BRUSSELS (AP) -- The European Union asked France on Friday to explain the decision of carmaker Renault SA to move excess production from its Slovenia plant to a factory outside Paris, a decision staunchly defended by President Nicolas Sarkozy.

The move announced Friday by Renault raised concerns about protectionism at an EU summit in Brussels that included the leaders of France and Slovenia.

Sarkozy said the decision to add 400 jobs in France -- while not taking away any in Slovenia -- had nothing to do with economic nationalism.

"It is exactly what I want," said Sarkozy after the summit. "We can defend production in France without costing one job in Slovenia," he said. "It makes me happy."

Slovenian Prime Minister Borut Pahor was much more apprehensive. "Let us be very cautious about any temptation of protectionism," he said, eager to protect the more than 2,400 jobs currently at the Renault plant in Novo Mesto.

"We will watch very closely," he said after the leaders at the EU summit unanimously declared to fight economic nationalism, a growing threat as countries struggle through recession.

"We expect that all member states honor this commitment. So no protectionism. No protectionism whatsoever," Pahor said.

Three weeks ago, the EU Commission approved France's car industry package after receiving a letter from Industry Minister Luc Chatel promising that euro7 billion ($8.95 billion) in soft loans for PSA Peugeot Citroen and Renault SA would not require them only to invest in French suppliers or car plants located in France.

The European Commission vets decisions on state aid to make sure they do not amount to protectionism and that they guarantee a level playing field within the open market of the 27 member states.

European Commission spokesman Jonathan Todd said competition authorities found it "surprising" that Chatel linked the move to a decision to provide billions in aid to struggling French carmakers.

Chatel welcomed Renault's decision as a "repatriation of the production" and noted that the government bailout plan was starting to show "results."

Todd said Chatel's comments are "in total contradiction to the letter ... (which) indicated that there would be no link between aid and the question of where car production takes place."

Britain, long a champion of free trade in Europe, immediately sent a warning against protectionism.

"We are an anti-protectionist European Union at a time when world trade is falling at its sharpest rate in more than 30 years. We have reinforced our commitment to free trade," Prime Minister Gordon Brown said at the summit.

Renault SA said Friday it plans to create 400 jobs in France by moving excess production of its Clio Campus model from Slovenia to the French site of Flins northwest of Paris, where currently 3,250 people work.

Renault's Slovenian plant of Novo Mesto makes the Twingo and Clio models and is at full capacity amid rising demand for small, cheaper models popular in dire times.

Associated Press Writers Robert Wielaard and Holly Fox in Brussels contributed to this report.

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