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Speech by M. Nicolas SARKOZY, President of the Republic, at the international aerospace show (excerpts)

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Le Bourget, 23 June 2007

INDUSTRIAL POLICY/COMPETITION/WTO/US/CHINA

(···) I am arguing for a simple approach - and dare I say it, one without any hang-ups - to the relationship between industrial policy and competition. I believe competition is essential to ensure the best quality/price ratio and stimulate service and innovation. But I'm going to face up to my responsibilities. I refute a theological, ideological approach making competition an end in itself. When competition is constructive, I am for it. When it runs counter to an efficient economic policy, I want the issue raised. Who can explain to me the benefits of competition in the electricity sector if it results in prices rising far higher than long-term cost prices? In economics, my only ideology is pragmatism.

I think, moreover, that the great diversity of our European partners' statements on these matters in fact masks a great unity of action. If we can recognize how close our interests are, rather than accuse each other of advocating either ultra-free market or protectionist policies, we'll be able to establish a genuine European industrial policy. (···) It's the job of politicians and statesmen to say to each other, "take care, let's look at the longer term". The market isn't the best, or any rate, the only guide for long-term action. Do we have the right to say this without immediately being accused of wanting to nationalize or not being in favour of the free market? Free trade doesn't mean that a finance minister has to sit on his/her hands or that a French president doesn't also have the responsibility of thinking about what the state of his country's industry will be in 20 years' time. An industrial policy isn't a swearword. Moreover I want to say, in this respect, that having an industrial policy isn't a country's right, but its duty. That doesn't mean a country can do everything, has to invest in every sphere. On the contrary, it has to make choices and, if possible, long-term ones.

There's a second comment I'd like to make on competition. Of course, I'm in favour of competition, the opening of markets and globalization. But to be extremely clear on this, I've said this to Mr Lamy, Mr Mandelson and, at the last G8 in its G24 format, to a number of our major partners: India, Brazil, China and Argentina. I want Europe to stop being naive.

For me, good competition is very simple, it's mutual competition. I tell our partners across the world: "you want us to open our markets. Fine. We'll open them the minute you open yours. You want us to lower our tariff barriers. Fine. We'll lower them the minute you lower yours". But, again from this point of view, I think we can no longer go on imposing environmental, social, fiscal and now monetary dumping on our industries and our businesses. (···)

Let me add - so as to be sure of being correctly understood in this hall and elsewhere - that the United States of America, which I feel so close to, is portrayed as a great free-market country. The Americans aren't bothered about having different tax rates depending on whether a product is manufactured in the United States or elsewhere. I'm asking for us to do what they do. Take the Small Business Act: in the WTO framework, the United States has an exemption. There's no reason for Europe not to have one! That's called reciprocity. No more, no less. It isn't being aggressive to say that. I shall be going to China where the Chinese President has invited me. I've a lot of admiration for this extraordinary China whose history goes back many centuries and who is embracing the future like a young country. But nevertheless, I'd like those here selling to China explain to us how it is that, just like that, a partner is proposed to them? I'm sometimes amazed when I see French or European industrialists introducing me to their Chinese partners. I wonder how they met them? It must be friendship at first sight.

TECHNOLOGY TRANSFERS/KYOTO PROTOCOL

We could talk too about technology transfers. How do they happen? We, Europe and France, don't need any advice on free markets. But let things be clear. Naivety is over. Reciprocity is starting. The same goes for the Kyoto Protocol. How can people imagine that we're going to impose on our businesses - and it's normal to safeguard the world's ecological balances - a requirement to produce cleanly and at the same time go on importing into our country products coming from countries which don't care a fig about the Kyoto Protocol? That's why I'm in favour of a carbon tax on imported products to restore a level playing field for competition. Or should we give up everything? Personally, I tell you, I won't give anything up.

AIRBUS

I've had four meetings with the Airbus employees, I went back to Toulouse two days after my investiture. It was actually - I say this to Louis Gallois - very moving. I can tell you that it's quite something to see in someone's look, that they've got confidence. I see this for myself every day, as I do when I go round the stands here. I have no intention of betraying that confidence. I'm absolutely determined to do the utmost to ensure that this extraordinary success of European industry is consolidated and amplified. I suggested to the German Chancellor Angela Merkel that we hold our next bilateral summit on 16 July in Toulouse at the Airbus headquarters. I convinced her. I told her I'd go to the Hamburg Airbus plant with her. Because for us, it isn't a matter of Franco-German rivalry, which is senseless, but of making Airbus a successful business that can be run.

(···)

EUROPEAN DEFENCE/FRENCH DEFENCE EFFORT

I say - in front of Hervé Morin, our Defence Minister - Europe can no longer afford the luxury, with its combined defence budgets still well below that of the US, of having five ground-to-air missile programmes, three combat aircraft programmes, six attack submarine programmes and around twenty tank programmes. Happily, we've built Europe. We took a first step with the A400M. But the future is in joint programmes and in consolidation of the European industry, with, I believe, the two going hand in hand. And, as head of the armed forces, I shall be vigilant, General, in ensuring that the share-out of work between EU countries involves each one contributing its best technologies rather than consolidating its weak points. The principle of a "fair return" for every country, with the friction this generates between them, is a poison which hinders and weakens the implementation of European industrial, technological and scientific programmes. Too many European armaments programmes and, more recently, Galileo have paid the price for this. This is one of the essential conditions for greater control of the armed forces' equipment effort, as regards both timetable and real costs. We'll talk about this again. It's my responsibility to ensure that our armed forces have the equipment they need to carry out their missions and fulfil our country's international commitments.

I have pledged to do this. Our defence effort will be maintained, bolstered. But quite obviously, our equipment effort, despite the salutary improvement carried out by Jacques Chirac, continues to be inadequate for the missions and needs. So I want preparation of the next multiannual military estimates Act to be the opportunity for a root and branch review of all the programmes in progress, including the design and presentation of the Act itself. We aren't obliged to use again a process which hasn't produced only successes. I'd really like people to think in terms of our priority capacity needs, rather than go blindly ahead and draw up a catalogue of equipment. Here I know I can count on the top military in our country. (···).

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