The European Union’s top trade official said on Thursday that the EU maintains its belief that President Joe Biden’s Inflation Reduction Act is discriminatory against enterprises based in the union.
However, according to statements made by Valdis Dombrovskis to CNBC, the European Union is now involved in continuous discussions with officials from the United States. These conversations have only alleviated a portion of the EU’s worries up to this point. He said that he had met with the U.S. Trade Representative, Katherine Tai, two days earlier, a meeting at which the pair agreed to strengthen engagement on important topics like electric car subsidies. He also mentioned that he had met with Katherine Tai.
During an interview at the World Economic Forum, which was held in Davos, Switzerland, he said that “our worries are the unfair provisions in the U.S. Inflation Reduction Act,” which is discriminating against EU enterprises.
We believe that rather than severing transatlantic value networks, we need to be working together to solve the issue of climate change and the transition to a greener economy.
In August, legislators gave their approval to the IRA, which allocates a record-breaking $369 billion for expenditure on climate and energy programs. It was received with quick condemnation from EU member states, who believe that a number of its measures, including green subsidies such as tax credits for electric automobiles built in North America, harm European industry.
When Geoff Cutmore from CNBC asked Dombrovskis whether or not there was a possibility that the disagreement may snowball into a trade war, Dombrovskis responded by saying, “At this time, we are working on negotiated solutions, and we are reaching out to U.S. authorities at multiple levels.”
We have a committed EU-US task team that is carrying on with its job. There has been some progress made, and some of our issues are being addressed; nonetheless, there are still problems that need to be addressed.”
In answer to a question regarding how the European Union (EU) would proceed if it was dissatisfied with the result of the talks, Mr. Dombrovskis said that the current situation “is not the time to rattle sabers.”
Given the problems posed by rising oil costs, the conflict in Ukraine, and the IRA, he noted that the group was working on its more comprehensive economic policy response to competitiveness concerns.
As part of this endeavor, an assessment of the current EU subsidies and funding will be carried out to determine whether or not they are being used in the most efficient manner possible.
Dombrovskis also stated that they were looking into amending the stringent state aid rules that are currently in place within the EU. This would enable member states to provide additional support for businesses that are assisting in the transition to a greener economy, as was previously requested by the President of the European Commission, Ursula von der Leyen.
Dombrovskis noted that to keep a fair playing field inside the EU single market, “but there of course we need to be carefully defining it.”
Michael McGrath, the Finance Minister of Ireland, stated on Wednesday that the European Union wanted to avoid engaging in a “subsidies race” with the United States and that any changes to the rules governing state aid must not benefit nations that have the “means and resources” to provide more assistance to businesses than other nations.
In the meanwhile, Spanish Prime Minister Pedro Sanchez said on Monday that the European Union may gain wisdom from the IRA.
“We need to modify certain internal components of our industrial policy, including state subsidies, cutting bureaucracy, and attempting to convey a message to the world’s industry that Europe, and Spain in particular, is a good place to locate,” he said.
