BRUSSELS, Feb. 11 (Xinhua) -- The European Union (EU) has been put on guard against protectionism as its member states are in haste to work their individual economies out of the financial crisis through protectionist measures.

In an apparent bid to counter the rise of protectionism within the 27-nation bloc, the Czech EU presidency announced Wednesday that EU leaders will hold a special summit in Brussels on March 1 before they meet in a formal setting two weeks later.

The leaders intended "to find a balanced position between those who think it is possible to violate the (EU) rules right now and those who do not think so, and I am among the latter," Czech PrimeMinister Mirek Topolanek told reporters at a press conference with European Commission President Jose Manuel Barroso.

"Some member states call for more protectionism. Others call for adherence to the rules. We should somehow moderate the discussion and find a balance," he said.

Although Topolanek avoided mentioning those member states, he has criticized French President Nicolas Sarkozy's protectionist comments.

Sarkozy came under fire after he said in a TV interview last week that French carmakers receiving state aid should keep production in France and consider relocating their plants in the Czech Republic back to France.

France announced on Monday that it will provide almost 8 billion euros (10.4 billion U.S. dollars) in preferential loans to its car industry on condition that the carmakers pledge to keep jobs and factories in the country.

The plan put Swedish and German carmakers on alert out of fear they would be placed at a further disadvantage.

The European Commission, the EU's competition guardian, is currently investigating the French plan to ensure that the state aid will not distort competition.

"We need to scrutinize very carefully the details of the subsidies," Barroso said. "We need to maintain the integrity of the single market which is the source of Europe's prosperity."

Besides France, Britain recently saw strikes against the use of foreign workers and the Spanish government is eager to persuade foreign workers to return home as unemployment rises.

British Prime Minister Gordon Brown in particular warned against financial protectionism. As EU countries spent billions of euros in financial bailouts, some of them are pushing banks to make domestic lending a top priority in order to support economic recovery. It has resulted in withdrawal of funds to home markets from overseas, disrupting normal international investments.

The Financial Times said although trade protectionism is unlikely to make a comeback, other forms of economic nationalism are actually coming to the fore.

Analysts are warning that those protectionist measures will only make the situation worse, not better.

Due to a lack of coordination among EU member states, unilateral reactions taken by one country may have a detrimental effect on another, resulting in a vicious downward spiral.

"We must coordinate our actions to maximize the benefits for all, and not have negative side effects on our neighbors," Barroso said. "Solidarity and coherence of EU action are more necessary than ever."

Rising protectionism within the 27-nation bloc also was a top concern for EU finance ministers when they met on Tuesday.

"Our ambition is to ensure that at the highest levels there should be a clear 'no' to protectionism," said Czech Finance Minister Miroslav Kalousek. "The biggest risk at the moment is protectionism" within the EU, he said.

As the EU sounded alarm about internal protectionism, there was a concern that it may spread to the external side.

"In some places there are sounds of protectionism. In some places it is real, "Indian trade minister Kamal Nath said at the World Economic Forum in January. "We are seeing greater use in the western world of anti-dumping measures, non-tariff barriers being used in Europe."

"If there are protectionist measures, India will be compelled to also take commensurate measures against those countries, which will be good for no one, "he added.

The European Commission recently reintroduced export refunds for dairy products after it had suspended the controversial subsidy in June 2007.

Dutch Finance Minister Wouter Bos said he was concerned about protectionism and that people from developing economies should not be left to pay for "our financial crisis" as a result of protectionist measures.

www.chinaview.cn
2009-02-12 09:26:14

Source: news.xinhuanet.com