EU edging toward trade spat with US
Bloc fears Washington’s measure will be at its expense, calling for ‘fairness’
BRUSSELS — European Union ministers have warned that time is running out to change Washington’s plans to grant consumer tax credits for US-produced electric vehicles and other green products, as the bloc’s officials call for fairness in the market.
The tension over Washington’s industrial policy is one of several areas of friction between the European Union and the US.
The EU argues the $430 billion Inflation Reduction Act, to take effect in January, could make the US a world leader in the electric vehicle market at Europe’s expense. It wants an exception to be made for EU products, something accorded to Canadian and Mexican goods.
Jozef Sikela, industry and trade minister of the Czech Republic, said all 27 EU members were concerned and agreed that the issue needed to be resolved quickly. The two sides set up a joint task force early this month to look at the issue.
EU Trade Commissioner Valdis Dombrovskis said he and EU technology chief Margrethe Vestager would assess progress when they meet US counterparts at the US-EU Trade and Technology Council on Dec 5.
“Many of the green subsidies provided for in the act discriminate against EU automotive, renewables, battery and energyintensive industries,” he said. “These are serious concerns for the EU, which I, and many of my colleagues, have raised repeatedly with our US interlocutors.
“What we are asking for is fairness. We want and expect European companies and exports to be treated in the same way in the US as American companies and exports are treated in Europe.”
Some ministers earlier expressed hope for a solution by the Dec 5 meeting, but Dombrovskis said the task force would need to continue its work beyond then.
The Dutch trade minister Liesje
Schreinemacher said a fully fledged trade war was in no one’s interest.
Her Swedish counterpart Johan Forssell said the time frame was tight.
“We cannot wait too long until we make a decision.”
Olivier Becht, France’s minister for foreign trade, said the US green transition should allow for fair competition, rather than breach World Trade Organization rules and trigger a subsidy race. The act could face a test at the WTO, although no member has brought a formal challenge.
“Is there then a concrete course toward answering the EU’s wishes or will we unfortunately be falling short?” Becht said.
High on the agenda
According to a top French official, France’s President Emmanuel Macron will raise concerns about the effects of the US industrial subsidies and tax breaks during talks with US President Joe Biden in Washington this week.
“We cannot risk more deindustrialization in Europe at a time when we’re trying to re-industrialize,” a senior aide to Macron told reporters before the French leader’s trip to Washington from Tuesday.
Trade disputes have been a red line for decades in trans-Atlantic relations, highlighted by fights over aircraft subsidies and steel exports and affecting everything from hormone-treated beef to liquor exports.
Planned subsidies under the Inflation Reduction Act passed by the US Congress in August are especially grating for the EU. For example, electric car buyers are eligible for a tax credit of up to $7,500 as long as the vehicle runs on a battery built in North America with minerals mined or recycled on the continent.