Biden’s $369 billion proposal riled up EU ministers
In an effort to avoid a transatlantic trade war, EU ministers warn that there isn’t much time left to settle the deepening disagreement with the US over Washington’s $369 billion in green subsidies. The Inflation Reduction Act (IRA) and its “buy American” clauses have been the subject of a joint US-EU taskforce. European capitals are getting dissatisfied with the lack of movement and action from this team.
The EU tade ministers’ meeting was led by the Czech Republic’s Jozef Sikela. He stated he sought resolutions before the December 5th meeting of a separate bilateral Trade and Technology Council. His remarks highlight the growing concern in the EU over the size of the US subsidy program.
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He expressed this is a time when both sides need to prioritize transatlantic unity in light of the Ukrainian war. Sikela pointed out the importance of US awareness of EU‘s concerns. He also mentioned the taskforce has to work out a solution which will be acceptable for both parties. Sikela‘s focus is on having certain solutions in place for the TTC on December 5th.
US is aiming to reduce inflation fast
US works to reduce its carbon emissions while generating employment. The IRA offers tax credits and subsidies for US consumers and businesses for goods like electric automobiles, wind turbines, and green hydrogen. Most are only accessible for goods that are mostly manufactured in the US.
Several EU businesses have already stated they will make their next investment in the US as opposed to the EU. Even though IRA doesn’t go into effect until January 1st the US already has far cheaper energy costs. This serves as an additional big attraction.
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These actions are building tension towards an interatlantic trade war. Even Ireland, one of the US’s strongest supporters in the EU issued a warning about the risks of delaying finding a solution. Ireland is pointing out these actions don’t reflect the principles of free trade and fair competition.
The Germans and the French also have a say
In a joint statement, the EU’s two largest economies agreed to set aside their recent differences. They are examining industrial policy solutions in order to protect European industry from unfair trade practices. The announcement comes after two days of high-level ministerial meetings in Paris.
This marks an increase in EU efforts to safeguard domestic manufacturing from the threat of unfair competition from the US. This includes inviting German foreign minister Annalena Baerbock and economy minister Robert Habeck to the Elysée palace. From EU standpoint, the American act is a protectionist measure because it encourages companies to shift investments from Europe.