The Auto Bailout and Trade Tensions

It appears that the multi-billion dollar aid package that will likely be given to the U.S. auto industry has not gone unnoticed by our trading partners:

"We will look very carefully at the details of the proposed aid package to the U.S. auto industry, in order to ensure compliance with international trade rules and assess the potential impact which it may have on trading partners," said Peter Power, trade spokesman for the European Commission, the E.U.'s executive arm. 

(http://money.cnn.com/news/newsfeeds/articles/djf500/200811140622DOWJONESDJONLINE000418_FORTUNE5.htm)

And:

"We are in the process of analysing the plan. The plan has not yet been presented yet. Of course, if it is illegal state aid, we will act at a WTO level," Barroso told Europe 1 radio.

"In any case, we are in the process of preparing a (European) plan that is not discriminatory. It is a plan that supports cleaner, more environmentally-friendly cars," he added.

(http://www.reuters.com/article/marketsNews/idUSLE47953820081114)

Proving a violation here will not be that easy, though.  There's the possibility of an "adverse effects" challenge, but that would have to wait until there are some adverse effects.  In addition, there may be some restrictions on which companies are eligible (described here), with foreign producers that have factories in the U.S. excluded.

It may be that the EU statements are simply designed to discourage the U.S. from inserting other discriminatory provisions into the aid package.