(Adds comments from briefing)
By Doug Palmer
WASHINGTON, Dec 12 (Reuters) - The European Union can support U.S. efforts to keep the U.S. auto industry from collapsing as long as the aid does not give the companies a competitive trade advantage, a top EU official said on Friday.
"We cannot have an interest to see the U.S. automobile industry collapse," European Commission Vice President Gunter Verheugen told reporters after talks with U.S. officials.
A collapse of the U.S. automakers "would have very serious repercussions for the European affiliates," he said.
The White House on Friday was considering an emergency aid package for the teetering U.S. auto industry after Congress failed to approve a $14 billion bailout plan.
Verheugen was in Washington for a meeting of the TransAtlantic Economic Council, a U.S.-EU forum to work on reducing trade and regulatory barriers that increase the cost of doing business.
"If fresh money is needed (for U.S. automakers), of course, we believe it should be done in a way that does not distort competition," Verheugen said. "But, in principle, to help the American automobile industry to restructure, to overcome this crisis is definitely in our interest."
The two biggest U.S. automakers are also major European manufacturers, Verheugen noted.
Auto parts suppliers, which actually provide more jobs than the automakers, are also under stress, he said.
"The majority are small- and medium-sized enterprises, who are characterized by the fact that they are undercapitalized and can not survive five, six or seven months of a crisis," Verheugen said.
"If one supplier goes bankrupt or disappears, not only one manufacturer has a problem, all the manufacturers have a problem," he added.
Since autos are the biggest purchase most consumers make after a home, it is not surprising the auto industry is one of the first to suffer from the current economic crisis, he said.
Governments do not have good tools to encourage consumers to buy cars, but one option is to provide incentives for consumers to trade in old polluting cars for new cleaner-running vehicles, Verheugen said. (Reporting by Doug Palmer; editing by Gary Crosse)