The French and German ministers of the economy were to start high-stakes talks with US officials yesterday to underscore European concerns over US President Joe Biden’s action plan to tackle climate change.
The aim is to discuss the impact of the Inflation Reduction Act (IRA) on European industry, with the act’s green subsidies and tax breaks stoking tensions between the US and Europe.
The US is keen to reduce dependence on Chinese imports, but the EU is concerned about collateral damage if companies are enticed by US subsidies to relocate outside the bloc.
Brussels is pushing Washington to make exemptions for European companies, but a joint task force set up to address the EU’s concerns has yielded few results.
For now, negotiations are proceeding under the European Commission’s leadership, and German Minister of Economic Affairs Robert Habeck believes that he and his French counterpart, Bruno le Maire, can contribute to finding new solutions.
“It’s a sign that the two biggest economies in Europe — Germany and France — are standing together in this,” Habeck told reporters in Washington on Monday, ahead of the meetings.
While he called it a “big success” that the US government was taking action against global warming with the IRA, he added that “the problematic part of it should be solved.”
The visits come after French President Emmanuel Macron’s trip to Washington in December, during which Biden said the IRA was never intended to disadvantage US allies.
Le Maire and Habeck were expected to stress the need to define fair competition along the lines of reciprocity, transparency and cooperation.
The European ministers were to meet top White House economic policy adviser Brian Deese and deputy national security adviser Mike Pyle.
They were then to speak with US Secretary of Commerce Gina Raimondo and US Secretary of the Treasury Janet Yellen, before meeting US Senator Joe Manchin — who was key in passing the IRA.
A Treasury official said that Yellen “welcomes the visit of her counterparts,” adding that the meeting was part of the US’ ongoing and sustained engagement with its European counterparts.
Yellen on Monday spoke with European Commission Executive Vice-President Margrethe Vestager and “stressed the need to stimulate technology development and deployment on both sides of the Atlantic to speed the transition to green energy and achieve our collective climate goals,” the Treasury Department said.
The IRA funnels US$370 billion into subsidies for an energy transition in the US, including tax cuts for US-made electric vehicles and batteries.
Habeck said in a statement before his trip that there is a need for “friendly, fair competition.”
In an interview on Friday, Le Maire called the IRA “a game changer.”
It “offers competitive advantages, which, coupled with very low energy prices in the United States, poses a risk to our industries,” he said. “The most important thing is that we cooperate with allies to have transparency about the amount of subsidies and tax credits that will be granted.”
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