BRUSSELS: EU leaders met in Brussels on Thursday at a summit focusing on trade dispute with the United States amid threats of a subsidy rivalry with the key ally.
The European Commission chief Ursula von der Leyen said after the summit said the block next month would come forward with a state aid proposal that would not only be faster and simpler, but also more predictable.
US IRA discriminates Euro car makers, violates WTO: EU
The European bloc is unhappy by a portion of the multi-billion-dollar US Inflation Reduction Act (IRA) which provides subsidies and tax cuts to US buyers of electric vehicles if they “Buy American”. The bloc considers the act discriminatory against European car makers as well as a violation of the rules of the World Trade Organization (WTO), and a threat to European investment.
To compete and keep big industrial companies on its shores, many EU countries want to loosen rules around national subsidies and boost public investment in cleaner energy. “European companies require subsidies in the same manner and of the same volume as those in the US, if you want to avoid the fragmentation of the European market,” said French President Emmanuel Macron.
The EU leaders, in the conclusion text of the summit, stressed on safeguarding Europe’s economic, technological and industrial base and preventing the global level playing field. The document read that the commission’s upcoming proposals should work to mobilise all relevant tools – of both the member states and the bloc – as well as improve the framework conditions for investment, including through the streamlining of administrative procedures.
However, some bloc members were not convinced that a serious response was needed.
Finnish Prime Minister Sanna Marin said that Europe needed to ensure that it did not indulge in an unnecessary trade rivalry with the US.
Meanwhile, German Chancellor Olaf Scholz said he felt the bloc could secure a status like Canada within the US’ application of its subsidies, despite it not being included in the North American Free Trade Agreement.
Macron and the commission have tried to persuade US President Joe Biden to revise the contentious parts of the IRA, but to no avail other than receiving promises of some “tweaks”.
Biden and his administration are of the view that the EU is free to come up with a subsidy arrangement of its own for electric vehicles, a sector in which China has the upper hand when it comes to batteries and rare-earth supplies.
-APP
