French, German ministers to tackle green subsidies with US| MENAFN.COM

Thursday, 30 March 2023 11:33 GMT

French, German ministers to tackle green subsidies with US


The French and German economy ministers, Bruno Le Maire and Robert Habeck, kicked off high-stakes talks with US officials Tuesday to underscore European concerns over President Joe Biden's ambitious climate action plan.

The aim is to discuss the impact of the Inflation Reduction Act (IRA) on European industry, with the act's controversial green subsidies and tax breaks stoking tensions between the United States and Europe.

The United States 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 the United States to make exemptions for European companies, but a joint task force set up to address the EU's concerns has yielded few results.

"We are here in Washington... to defend the interest of the European industry and to ensure fair competition between the European industry and the American industry," Le Maire told reporters Tuesday before the talks.

"Our common goal with the US is to fight against climate change," he said.

But requirements have to be met to ensure fair competition, he added, noting that this is what "we will explain to our US allies and friends."

For now, negotiations are proceeding under the European Commission's leadership, and Habeck believes that he and 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.

Habeck added ahead of the talks that the IRA is a welcome development in fighting global warming, but both sides "need to solve some problems."

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.

- 'Full transparency' -

The European ministers are expected to stress the need to define fair competition along the lines of reciprocity, transparency and cooperation.

Le Maire said Tuesday that there is a need for "full transparency on the level of subsidies and tax credits" granted by the IRA, and for a "maximum of European components" to be included in the act's framework so they can benefit from subsidies applied to American products.

He also raised the possibility of a ministerial level hotline when strategic investments from both sides of the Atlantic are at stake.

Le Maire and Habeck are set to meet top White House economic policy advisor Brian Deese and deputy national security advisor Mike Pyle on Tuesday morning.

They will then speak with Commerce Secretary Gina Raimondo and Treasury Secretary Janet Yellen, before meeting Democratic Senator Joe Manchin -- who was key in passing the IRA.

A Treasury official said Yellen "welcomes the visit of her counterparts."

Yellen spoke Monday 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," the Treasury Department said.

Under the IRA, $370 billion will go toward cutting greenhouse gas emissions in the form of tax cuts for companies, along with subsidies for electric vehicles, batteries and renewable energy projects -- if they are manufactured in the United States.

In an interview with AFP on Friday, Le Maire called the IRA "a game changer."

He added that it "offers competitive advantages which, coupled with very low energy prices in the United States, poses a risk to our industries."

To head off the threat to European industry, the EU last week unveiled proposals such as a relaxation of state aid rules to level the playing field.

Le Maire added on Monday that the EU was close to finalizing its response to the IRA.

Following the Washington visit, European leaders will hold a summit aimed at crafting a response to the US measures.


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