Here are the requests of France and Germany to Biden on green subsidies
France and Germany want Biden to extend "green" subsidies to European companies as well. And they are asking the Commission for a new industrial policy with state aid. All the details
France and Germany, the two largest economies in the European Union, have asked the United States to extend aid to industry contained in the Inflation Reduction Act to European companies, in order to resolve trade tensions before they escalate into a more serious dispute. large or even in a trade war .
THE DOCUMENT OF HABECK AND LE MAIRE
In a joint document, German Economy Minister Robert Habeck and his French counterpart Bruno Le Maire say it is in the mutual interest of the European Union and the United States to "find common ground quickly" on the Inflation Reduction Act, the 369 billion dollar law which allocates substantial incentives to US manufacturing in some strategic sectors for the ecological and digital transitions.
A “GREEN ECONOMIC PARTNERSHIP” BETWEEN THE EU AND THE USA
Habeck and Le Maire propose a "green economic partnership" with Washington. And they are asking Joe Biden's administration to extend subsidies to US, Canadian and Mexican companies that produce green technologies, such as batteries for electric vehicles, to "partners and allies".
The European Union fears that the Inflation Reduction Act could damage the European industry, and in particular the automotive industry, putting it at a competitive disadvantage compared to its North American competition. Brussels has created a special task force with the White House to resolve the conflicts.
THE OPENING OF BIDEN
This month Biden, during a visit to the United States by French President Emmanuel Macron, said that the anti-inflation law could be changed to facilitate access to subsidies by European companies. The details, however – changing the Inflation Reduction Act would require new and complicated negotiations in Congress – are not yet known.
The Franco-German document states that "it is in our mutual interest to quickly find common ground on this matter and avoid disruption of the level playing field between close partners, at a time of trusting cooperation to deal with the Russian war against Ukraine".
LOCAL PROVENANCE AND STRATEGIC OBJECTIVES
The European Union is not the only US partner to have criticized the Inflation Reduction Act's subsidies to North American electric vehicle manufacturing. The UK, Japan and South Korea have also complained, arguing that those measures are discriminatory against their own companies and which violate the rules of the World Trade Organization.
Paris and Berlin want Washington to eliminate the requirement of North American origin for manufacturing, in order to allow European products to access the same bonuses reserved for US ones.
It is a difficult request to fulfill, because it goes against the strategic objective of the Inflation Reduction Act. In fact, by trying to move the electric car supply chain in the United States and in the rest of North America, the law represents an attempt by the administration Biden to disincentivise supplies of materials and components from China, Washington's economic and geopolitical rival that currently dominates the supply chain of batteries and base metals.
MORE TRANSPARENCY IN COMMUNICATIONS
France and Germany also ask for more transparent communication from the American side regarding subsidies for "green" industry, in order to coordinate policies.
THE GERMAN SPD CRITICISM
Bernd Westphal, spokesman for the Social Democratic Party of Germany (SPD), in government with Olaf Scholz, told the Financial Times that “American companies operating in Europe currently have access to a whole range of EU funds and programmes, such as subsidies for electric cars, funds for business development, access to research and technology, and all the other benefits you get from the EU's single market. It would therefore be appropriate”, he added, “to seek a rapprochement on these bases”.
FRANCE AND GERMANY PUSH FOR A EUROPEAN INDUSTRIAL POLICY
France and Germany are also proposing the establishment of a new "green industrial policy" in the European Union, which will speed up the procedures for assigning state aid to European technological innovations for decarbonisation.
Le Maire and Habeck say that Brussels should allow tax credits and targeted subsidies to some strategic sectors – such as wind energy, hydrogen and heat pumps – to match the public aid allocated by the United States.
Berlin and Paris would also like to halve the timeframe for approving Important Projects of Common European Interest (IPCEI). The current regime allows EU member countries to support large innovative projects without infringing EU rules on state aid, provided that these projects make a significant contribution to economic growth, employment and competitiveness in the EU.
The French and Germans think that, as a first step, Brussels should redirect the funds already allocated towards the development of a "green" industrial base in Europe. However, the president of the European Commission, Ursula von der Leyen, has already said she wants an expansion of RePowerEU, the plan dedicated to accelerating energy detachment from Russia and the transition to clean sources.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/francia-germania-sussidi-industria-verde/ on Tue, 20 Dec 2022 14:17:43 +0000.