Europe shows united front against Biden’s inflation-cutting act

European Union member states are standing firm against President Joe Biden’s inflation-cutting act amid fears it will harm their businesses and local economies.

The comprehensive US legislation, approved by US lawmakers last August, includes Record $369 billion in spending on climate and energy policiesIt was discussed by the 27 EU finance ministers on Tuesday. This came after the European Commission, the executive arm of the European Union, stated that there was ‘serious concerns’ About designing the financial incentives in the package.

“Every minister agreed that this is a topic of concern at the European level and that we need to find out what is the best response,” said a European official who followed the ministers’ discussions but preferred to remain anonymous due to the sensitive nature of the ministers. The case, for CNBC.

The same official added that “there is a political consensus (among 27 ministers) that this plan threatens European industry.”

The European Union has included at least nine points in US inflation-cutting law that could be a breach of international trade rules. One of the biggest sticking points for Europeans is the tax credits for electric cars made in North America. This may bring challenges for European automakers focused on electric vehicles, such as Volkswagen.

“This is what we ultimately seek: to have the European Union, as a close ally of the United States, in a position very similar to that of Mexico and Canada,” Valdis Dombrovskis, head of EU trade, said in a newspaper. Tuesday conference.

South Korean officials have also raised similar concerns for Europe, given that the range of measures in the United States could also constrain them. Hyundai and others doing business in America.

A second EU official, who also followed the ministers’ discussions but preferred to remain anonymous due to the sensitive nature of the issue, said the talks were not “too deep” – highlighting the unity among ministers at a broader level.

The same official said that the French Finance Minister, Bruno Le Maire, told his counterparts that he was not asking for a strong negative decision against the US friends of the EU, but rather a request for an “alarm bell” for his European counterparts who need to protect the interests of European companies.

Earlier on Monday, Le Maire told CNBC: “We need to be very clear, very united, and very strong from the start, explaining [to] Our partners in the United States [that] What is at stake behind this inflation-reducing law is the possibility of maintaining a level playing field between the United States and Europe.”

“Equal opportunity is the core of the trade relationship between the two continents and we don’t want to see any kind of decision that could harm this level playing field,” he said.

French officials have long advocated strategic independence – the idea that the European Union needs to be more independent of China and the United States, for example, by supporting its own industry. Last month, French President Emmanuel Macron suggested that the European Union should also consider a “European Purchase Law” to protect European carmakers.

“We need European purchase law like Americans, we need reservation [our subsidies] “To our European manufacturers,” Macron said in an interview with France 2: “You have China protecting its industry, the United States protecting its industry and Europe is an open house.”

A task force between European and US officials, which held its first meeting on the topic last week, will now meet every week to discuss how to address Europe’s concerns about the law to cut inflation.

The idea is to “continue to promote a deeper understanding of the law’s meaningful progress in lowering costs for families, our common climate goals, and the opportunities and concerns for EU producers,” White House He said in a statement.

Despite regular contact, US officials are dealing with the midterm elections and the Inflation Reduction Act has already been enacted, meaning that any changes must come during the implementation phase.

“It is clear that the EU has legitimate concerns about the inflation-reduction law and its direct and indirect discrimination,” Fredrik Ericsson, director of the European Center for International Political Economy, told CNBC.

“Many IRA policies that take an ‘America First’ position will harm competition and EU firms, especially in sectors where the EU is competitive, not least green industries and clean technology. The EU may go to the WTO. [World Trade Organization] To sort out these issues but it is more interested in addressing them bilaterally.”