STRASBOURG, France (AP) -- France, the current holder of the European Union presidency, called Tuesday on EU regulators to show flexibility in applying state subsidy rules so governments could help out their struggling carmakers.
European car companies are asking for EU governments to give them euro40 billion ($51 billion) in soft low-interest loans to help them build cleaner cars while sales slump during the economic downturn.
But the European Commission has warned against favoring one sector over another, saying that would be unfair to other industries coping in a tough climate without billions of euros (dollars) in government aid.
French European Affairs Minister Jean-Pierre Jouyet told the European Parliament that the car industry was the economic sector "most threatened" as recession hits several European countries. Carmakers such as Volkswagen AG and Peugeot-Citroen are some of Europe's biggest employers.
Jouyet claimed that EU regulators could go easy on strict rules limiting state aid if they wanted to.
"The flexibility built into measures on state aid can be used to the full so that the EU and its members can support those sectors of the economy most severely threatened," he said.
Regulators insist that those subsidy rules must be obeyed -- even in a downturn -- to keep competition fair and limit any damage to the economy.
EU Commission President Jose Manuel Barroso said any state support for industry need to be short-term and targeted: "These are the three T's -- timely, targeted, temporary."
Support seems to be growing among EU governments for a car industry bailout.
In Germany, Foreign Minister Frank-Walter Steinmeier met with auto industry officials and trade union IG-Metall's chief Berthold Huber and said afterward that "if such a sector has problems, policies have to take care of them."
Luxembourg's Prime Minister Jean-Claude Juncker, representing the countries that use the euro, was quoted as saying by Bild newspaper Tuesday that Europeans couldn't just stand by idly if the U.S. government was going to spend billions of dollars to help Ford, GM, and Chrysler in the U.S.
Germany chancellor Angela Merkel said Monday the federal government would monitor the situation of the troubled Opel car company closely and come to a decision by the end of the year.
"We haven't yet decided if such a bailout is necessary, it depends on the developments in the United States," Merkel said.
EU finance ministers have asked the European Investment Bank -- which governments fund -- to come up with some ideas to help carmakers. They did not specify an amount for any loans.
Luxembourg Prime Minister Jean-Claude Juncker, who leads monthly economy talks between the 15 euro-zone nations, told Germany's Bild daily that Europe could not abandon its carmakers when U.S. rivals Ford, General Motors and Chrysler were getting U.S. government help.
German Foreign Minister Frank-Walter Steinmeier also backed financial support to protect German jobs.
AP Business Writer Aoife White contributed to this article from Brussels and AP Business Writer George Frey contributed from Berlin.