EU eyes resolving disagreements about the US Inflation Reduction Act
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The European Council's president notes that the EU and the US were close allies, but even allies disagree.
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European Council President Charles (Reuters)
European Council President Charles Michel said, on Wednesday, the European Union is looking for a favorable outcome from talks around the US Inflation Reduction Act (IRA), which is a topic of dispute between the EU and the US.
Speaking at a plenary session of the European Parliament, Michel said: "We sincerely hope the dialogue with American friends will lead to concrete positive results. Let's be clear, in my opinion, European companies must be able to benefit from the same conditions as Canadian and Mexican companies."
The European Council's president stated that the EU and the US were close allies, but even allies disagree.
The IRA, which was signed into law by US President Joe Biden in August 2022, commits $300 billion to deficit reduction, as well as approximately $370 billion in funding for energy security, including tax credits for US-made electric vehicles and consumer subsidies, and $80 billion to increase Internal Revenue Service tax enforcement and operations.
A flashback
In recent months, relations between the EU and the US have not been very smooth. The EU has lately condemned the subsidies offered to American companies in President Biden’s Inflation Reduction Act, giving them unfair leverage over their European rivals.
Back in October, German Chancellor Olaf Scholz and French President Emmanuel Macron agreed that American subsidy plans will end up distorting the market, as they intend to sway companies to shift production to the US.
The UK has already announced it joined the EU in opposing the Act, but European leaders have been scrambling for ways to push for amending the IRA.
Unlike trading partners with the EU, the IRA has exemptions set for products from its NAFTA partners, and the EU has been calling for these exemptions to be extended to the EU.
On December 4, Bernd Lange, the chair of the European Parliament's Committee on International Trade, stated that the EU should lodge a complaint with the World Trade Organization (WTO) against the US regarding the contentious Inflation Reduction Act (IRA).
On December 17, China's Commerce Ministry said thirty-two member-states of the World Trade Organization (WTO) sent the US over 2000 inquiries over the week regarding its discriminatory trade policy.
On December 22, in a bold move against the US, Macron said that European countries should be more decisive in the NATO alliance and reduce their “reliance on the US," highlighting the necessity to develop more autonomy in technology and defense capabilities, including from the US.
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