Minister defends "Buy French" push from critical WTO

PARIS Mon Oct 22, 2012 3:24pm EDT

PARIS (Reuters) - The French minister behind a media campaign to promote the "Made In France" brand rejected World Trade Organization concerns over protectionism on Monday and blamed the world body for failing to halt unfair competition from China.

Industry Minister Arnaud Montebourg donned France's emblematic striped Breton sweater for a magazine cover published last week to urge local consumers to favor French products such as food mixers by the 75-year-old Moulinex company.

The move came as France prepares reforms aimed at restoring lost competitiveness on world markets, with President Francois Hollande's Socialist government under pressure from employers to cut labour charges they say make French products too expensive.

WTO chief Pascal Lamy, a fellow French Socialist, warned at the weekend that appeals to favor French goods could become "patriotic protectionism", insisting that world trade relied on countries being open to imports.

"I suggest that Pascal Lamy address the imbalance between industrial nations so as to better defend French and European business," Montebourg fired back on France Info radio.

"China was let into the WTO without any conditions," he added of China's 2001 entry in the body, alleging that hundreds of thousands of jobs had been lost in Europe due to unfair competition in the world economy.

European Union Trade Commissioner Karel de Gucht said Montebourg's protectionist push made no sense given France probably had the most industrial firms among the world's top 500 companies.

"France can't redistribute the global trade cards alone," he said in an interview with French newspaper Le Figaro to be published on Tuesday.

"These firms probably do better overseas than they do in France. So I ask: How do you reindustrialize France with a 35-hour week and without resolving the high wage costs? I don't think Mr Montebourg has much interest in the long-term."

Montebourg, who wants supermarkets in France to set up shelves with purely French products as they do for organic goods, has criticized multinationals such as steel giant ArcelorMittal over plans to close certain French operations.

He is also pushing for a law that would force companies to find a buyer for such assets rather than shut them down - a move even some trade unions suggest would be hard to implement.

French unemployment has hit 13-year highs above three million, or 10 percent, and latest trade data showed a widening of its current account deficit in August.

France's industrial sector accounts for around 13.5 percent of its national output, down from nearly 18 percent in the mid-70s, according to official data.

Employers group Medef has called on the government to make deep cuts to labour charges, which are among the highest in Europe along with those in Sweden and Belgium and are needed to finance the generous welfare state.

RELUCTANT TO TRANSFER CHARGES

However the government is reluctant to transfer the charges to other levies such as a value-added tax, arguing that this would hit consumer spending and so dampen economic growth, which analysts forecast at around 0.4 percent next year.

Instead it has set up a state investment agency aimed at helping small business to create higher-value products for which world markets are prepared to pay a premium.

"France has got major attractions - let's defend them and stop running ourselves down," said Montebourg.

Under French rules, companies can advertise their wares as "Made in France" if the last part of the production process takes place in France - meaning that their components or even part of the assembly process can be non-French.

"One hundred percent French, that doesn't exist any more," Montebourg acknowledged.

French media have lampooned the appearance of the 49-year-old Montebourg in a sweater originally produced for the French navy that has become a fashion icon and inspiration for designers such as Jean-Paul Gaultier.

Asked to comment on the outfit, Medef president Laurence Parisot said she found the Montebourg photo shoot for the magazine section of Le Parisien newspaper "very sexy".

(Additional Reporting by John Irish; editing by Catherine Bremer and Michael Roddy)

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