Auto Bailout

About US auto bailout
US auto bailout is presently in its initial stages as federal government is making efforts to get to a compromise regarding any financial aid. They are poised to provide $25 billion to automobile companies in US. They are trying to provide assistance through other means like creating new sources of finance and using money that has been earmarked for development of fuel efficient technologies.

Impact of US auto bailout

About US auto bailout
US auto bailout is presently in its initial stages as federal government is making efforts to get to a compromise regarding any financial aid. They are poised to provide $25 billion to automobile companies in US. They are trying to provide assistance through other means like creating new sources of finance and using money that has been earmarked for development of fuel efficient technologies.

Impact of US auto bailout
US auto bailout is likely to give rise to trade disputes from a global economic perspective. This is because when a major economy provides one of its ailing industries with financial aid, others have to follow suit. This normally give rise to unhealthy and dangerous competition. Considering economic conditions at present this is not a situation any country would like to find itself in.

There are discussions regarding fairness of means that have been adopted by US in order to replenish their ailing automobile industry. It is also being speculated if federal government is compensating for governmental aid that is normally provided to automobile industries of economic rivals of US.

US auto industry bailout is being seen as a lifeline that has been thrown to car makers. Now authorities in Europe, Asia and Canada have followed this example and are planning financial aid packages for their auto industries. However, European Union has taken a different stance regarding auto industry bailout of US. It has decided to lodge complaints against any more auto industry bailout in US.

Even though China is considering complaining against US auto bailout as well, its government is about to provide financial aid to Guangzhou Automobile Group and SAIC Motor. US auto bailouts have been at center of long standing dispute between American automobile companies and non American automobile companies. American auto establishments like General Motors, Chrysler and Ford Motor have stated that auto companies outside US have received various economic benefits from their national governments like health care, currency related advantages and retirement benefits during economic crises.

Competition Commissioner of European Union, Neelie Kroes, has requested 27 member nations to not provide subsidies to their automobile industries as that would create economic problems on a global basis. She is, however, in favor of limited aid for entrepreneurs, educational projects, research and environmental projects as that is within rules of European Union and limits of economic feasibility.