The European Union’s top trade official called for urgent steps before the end of 2022 to modify a US climate law to cut off the bloc’s EVs from US tax credits, calling the measure discriminatory.
According to CNBC, this year’s $430 billion Inflation Reduction Act (IRA) provides $7,500 tax credits for new purchases of Ford, Tesla, and other North American-built electric vehicles, which the 27-country bloc fears will significantly impact European carmakers.
US-EU Trade and Technology Council meeting
EU Trade Commissioner Valdis Dombrovskis, talking to Deutsche Welle before the US-EU Trade and Technology Council (TTC) meeting, stated the law threatened to undermine progress done by the year-old transatlantic forum.
With all our discussions, we are in a sense making a step forward, but with the Inflation Reduction Act we’re making two steps backwards, so we need to reconcile it.
EU Trade Commissioner Valdis Dombrovskis
Dombrovskis said the US-EU task force was tackling the issue, but more work was needed.
He noted that “we need to move from this engagement to concrete results and we need to do this still this 2022” because some provisions were due to kick in by 2023.
In addition, the TTC focused its first two meetings on regulatory co-operation and showing a united front against China’s non-market economic practices.
Bruno Le Maire, a French Finance Minister, said he and Robert Habeck, the German economy minister, have begun talks with their US counterparts on an exemption for all EU-built green products.
However, he also stated the European Union needed its own IRA equivalent.
EU to adopt state aid rules to prevent investment withdrawals
European Commission head Ursula von der Leyen stated the EU would tailor its state aid rules to prevent the withdrawal of investment triggered by the IRA while providing cooperation on raw materials to counter China’s rule.
The EU looks at how to make its subsidies “more efficient” and possible increases in the US-EU financing, says Dombrovskis.
Moreover, the dispute threatens to obscure the TTC meeting agenda on the University of Maryland campus in College Park, Maryland, EU and US officials said.
Participants of the TTC meeting
Participants include European Commission Executive Vice Presidents Margrethe Vestager and Valdis Dombrovskis, US Trade Representative Katherine Tai, Commerce Secretary Gina Raimondo, and US Secretary of State Antony Blinken.
Joint roadmap
In a December 1 draft of a joint statement issued late Monday, the two parties are to state, “We acknowledge the European Union’s concerns and underline our commitment to address them constructively.”
A White House spokesperson stated the climate law would be part of the discussions on trade and added that the US side was “committed to continuing to understand EU concerns” through the recently-established task force.
The spokesperson said that the meeting would create a “joint roadmap” to evaluate trustworthy artificial intelligence technologies and a task force to lower research barriers in quantum computing science and technology.
South Korean and European officials criticized the US law at the G20 Summit in Indonesia in November. During French President Emmanuel Macron’s state visit to Washington last week, he told CBS it was a “job killer” for Europe.
In addition, US President Joe Biden told Macron that there could be “tweaks” to the law to make it easier for European countries to join in the credits, but it’s still unclear how that will be done.
French officials stated they’re hopeful an executive order from the White House can provide European countries a break without needing revisions from Congress, something the White House wants to evade.
