The Biden law, which also provides tax breaks for companies based in the US, has caused a lot of concern in the EU, with President Macron the one who strongly raised the issue in his recent meeting with Joe Biden.
The trade “war” between Europe and the US has begun to take shape, with Brussels officials going on the counterattack and even proposing an EU appeal to the World Trade Organization.
In particular, the president of the European Parliament’s Trade Committee, Berd Lagge, ruled that the EU should consider filing a complaint with the World Trade Organization (WTO) over US public aid in key sectors, especially in the field of green energy.
Endless Negotiations
US and EU officials, at this stage, are maintaining a conciliatory tone on what Biden’s Inflation Reduction Act (IRA), adopted in August and which provides for about 430 billion euros in spending, with Washington to promise to “fix” some of its provisions.
The EU does not hide its concern, judging that especially the tax breaks for companies based in the USA will distort competition to the detriment of European companies in the automotive and clean energy sectors.
It is characteristic that commissioner Lage said that he does not expect a solution to be found through negotiations as, as he told the media of the Funke group, in the talks that will begin next week, only marginal concessions will be made.
“I don’t think much will change on the ground, the law has already been passed,” said the chairman of the EP’s trade committee, who said the appeal to the WTO would send the message that public aid promoted by Joe Biden’s administration is against to the rules.
The EU must “support” its industry
At the same time, the European commissioner in charge of the internal market, Thierry Breton, called for the creation of a “European fund” to “support industrial projects” to counter the IRA law, adopted in the US and highly criticized by the French president, Emmanuel Macron, during his visit to America.
The European Union has not hidden its concern, for months, about the consequences of the expenses, amounting to 430 billion of the Biden administration, dedicated to the environment and approved in August. The specific law was at the “heart” of Emmanuel Macron’s official visit to the other side of the Atlantic.
It entails “distortions of competition to the detriment of EU companies”, Thierry Breton said. Breton threatened in November to “go to the World Trade Organization (WTO)” to present Brussels’ arguments.
Emmanuel Macron raised the issue with Joe Biden
Emmanuel Macron said on Friday he would like the issue of “exemptions” he is seeking from the US for European industries to be “fixed” by the first quarter of 2023, after calling some of the US measures “too aggressive”.
The American president declared his willingness to correct the “defects” of this law, which he defends tooth and nail.
“After the openings secured in Washington by the president (of France), I am convinced that the efforts of the European Union will bear fruit. Sooner than we thought, I hope. Maybe in the next few days”, estimated Breton.
The commissioner underlined the need for Europe to improve its attractiveness and competitiveness, emphasizing “technology and strategic sectors for the success of the green transition”, in particular wind energy, solar energy and electricity grids, adapting the “very heavy” regulatory framework.
In the face of the energy crisis, American competition and China’s economic policy, he proposed the creation of a “European fund” to support “industrial projects” and to “coordinate” national projects.
Emphasizing the different terms regarding the issuance of debt by member state, Breton also said that “we must undoubtedly foresee financing of around 2% of the EU’s GDP, i.e. around 350 billion euros”.
The EU must respond to the US aid package
The European Union must adjust its state aid rules to prevent an outflow of investment due to a new green energy subsidy package in the US, European Commission President Ursula von der Leyen has said. .
“Competition is good, but this competition must be on equal terms,” she said in a speech in the Belgian city of Bruges.
“The Inflation Reduction Act should make us think about how we can improve our government aid frameworks and adapt them to a new global environment,” he added.
The 27-member European Union fears the $430 billion US IRA, with its generous tax cuts, could attract EU businesses and disadvantage European companies from carmakers to green-tech makers.
The issue is included in the agenda of the meeting of the EU-US Council on Trade and Technology, which will be held on Monday, December 5.
The meeting will be attended by US Secretary of State Anthony Blinken, Commerce Secretary Gina Raimondo and US Trade Representative Catherine Tye, along with European Commission Vice Presidents Valdis Dombrovskis and Margrethe Vestager.
