Monitoring Desk
MADRID: The European Union (EU) is planning new subsidies to promote inhouse green technology and counter the United States (US) measure that carmakers of the continent see as protectionist, the bloc’s internal market commissioner said on Tuesday.
The US Inflation Reduction Act (IRA) contains about $370 billion in green energy subsidies and tax cuts for US-made batteries and electric cars.
European nations have been unsettled by the policy, terming it as discriminatory, which lavishes benefits on buyers of US-made electric cars.
“We must react; we can’t stay still,” European Internal Market Commissioner Thierry Breton said at a business forum in Madrid.
EU members unsettle by US policy
The former economy minister of France said he was “working hard to propose something comparable” to the US plan for our industrial ecosystem.
“We will propose something very quickly,” he said.
Among IRA’s provisions are tax credits for electric vehicles — up to $7,500 for new purchases — that will only apply if the product is assembled in the US and most components are sourced domestically or from a free trade partner.
Breton said this would create a “barrier” to trade, which was “unacceptable” and violated World Trade Organization rules.
US President Joe Biden said last month the Inflation Reduction Act was never intended to disadvantage US allies.
While negotiations are underway between Brussels and Washington for a solution, calls for a tough line from some in the EU have stoked fears of a trade war.
