EU should improve competitiveness against US IRA: EU Chief
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European Commission President Ursula von der Leyen gives a keynote speech at the College of Europe in Brugge, Belgium, about the EU's competitiveness on the global market.
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European Commission President Ursula von der Leyen applauds during a ceremony marking the 70th anniversary of the European Parliament, Tuesday, Nov. 22, 2022 in Strasbourg, eastern France (AP Photo/Jean-Francois Badias)
The European Union should take domestic action to rebalance the playing field and reduce the distortions caused by the controversial US Inflation Reduction Act (IRA), European Commission President Ursula von der Leyen said on Sunday.
In a keynote speech at the College of Europe in Brugge, Belgium, von der Leyen talked about the EU's competitiveness in the global market.
She admitted that the IRA is "raising concerns" in Europe, adding it could lead to unfair competition and broken supply chains. However, Europe is in a good place to compete in international markets and may enhance its standing even further.
"The first [way] is to adjust our own rules to facilitate public investment into the [green] transition. The second – we have to reassess the need for further European funding of this transition. And thirdly, we have to work with the United States to adjust some of the most concerning aspects of their law," von der Leyen said.
Starting January, the IRA will unlock $369 billion in tax credits and subsidies for US clients and firms making green tech products in the country. A number of EU firms have previously said they would invest in the US rather than the EU, with increasing energy prices at home a crucial factor to take into consideration, the Financial Times reported.
Concerns are escalating in Europe that the US tax credit plan could launch a subsidy race between the transatlantic allies at a time when it's in their interest to stay united in the face of the Ukrainian crisis.
Macron slams IRA subsidies on first day of state visit to Washington
On the first day of a state visit to Washington, French President Emmanuel Macron couldn't hold himself but throw a massive undiplomatic remark at his US hosts, that the Inflation Reduction Act (IRA) subsidies were posing a major threat to French competitors.
An AFP journalist reported he heard the French President tell US lawmakers and business people, "This is super aggressive for our business people."
"You will perhaps fix your issue, but you will increase my problem," he said, referring to the Inflation Reduction Act.
They had just invited him to lunch ahead of his meeting with US President Joe Biden scheduled on Thursday.
In light of the sweeping energy crisis throughout the EU, serious concerns have been raised since Washington adopted the Inflation Reduction Act (IRA) on August 16, 2022, which many officials believe will entice crucial enterprises to invest in the US rather than the EU.
Some EU officials have gone as far as criticizing the bill for breaching international trade rules.
The IRA specifically covers a wide range of areas, including energy-related legislation.
It increased the Investment Tax Credit for renewable energy projects from 26% to 30% and extended it to all storage projects. It also includes tax credits to manufacture solar panels, inverters, and racking components.
