The planned U.S. federal aid to Detroit will be closely monitored, Merkel said Tuesday at a news conference in Berlin where she also unveiled a $66 billion economic stimulus package.
"We can't sit and watch for years as the American car industry is being kept alive by billions in taxpayers' money while we're facing competitive disadvantages," Merkel said. "It may be that we will have to hold some very serious talks about this."
Because of the financial crisis, Germany's car sector is suffering from falling domestic and international demand. Merkel is worried that companies like Daimler, Volkswagen and BMW face competitive disadvantages if Detroit really gets the $17 billion in Treasury loans from the new U.S. president.
German and other European authorities therefore will closely watch any aid package that reaches Detroit, Merkel said.
"These are matters relevant within the context of the World Trade Organization," she said.
Germany's stimulus package includes its own, albeit more modest measure to help German car companies. It will hand a $3,300 voucher to each German who buys a low-emission car and ditches one that's at least 10 years old. The entire measure is worth some $2 billion, Berlin said.
Stefan Nicola, UPI Europe Correspondent
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