France plays bad cop, threatens building EU defenses: Politico
President Emmanuel Macron accuses Washington of protectionism and threatens to put EU’s defenses up.
As France reclaims its usual role as Europe's troublemaker on the transatlantic trade front, US President Joe Biden should beware, Politico reported.
On Biden's watch, it appeared like tensions between Brussels and Washington were thawing. Faced with a common antagonist in China, the EU and the US reached a truce last year on tariffs imposed by former President Donald Trump on European steel and aluminum. Russia's military operation in Ukraine has required America and Europe to portray a united front, at least politically, this year.
The EU is enraged that the US is putting money into the domestic electric car industry. Europe, accusing Washington of protectionism, is now threatening to build its own defenses.
Unsurprisingly, French President Emmanuel Macron is leading the charge. “The Americans are buying American and pursuing a very aggressive strategy of state aid. The Chinese are closing their market. We cannot be the only area, the most virtuous in terms of climate, which considers that there is no European preference,” Macron told the French daily Les Echos.
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Increasing the stakes, he urged Brussels to assist consumers and businesses who purchase electric vehicles manufactured in the EU rather than those manufactured outside the bloc. There are good reasons why the Europeans are fretting about their trade balances.
The war has delivered a massive terms-of-trade shock, with skyrocketing oil costs dragging the EU into a massive bloc-wide trade deficit of €65 billion in August, up from barely €7 billion the previous year. One aspect of these tensions is Europe's growing reliance on American liquefied natural gas to replace lost Russian supply.
Macron's remarks reflect EU concern about Washington's Inflation Reduction Act, which encourages US consumers to "Buy American" when choosing a greener car. The EU claims that forcing cars to be assembled in North America and to have a particular amount of local content discriminates against the EU and other trade partners.
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The European Commission aims to convince Washington to find a diplomatic compromise for European carmakers and their suppliers. If it doesn't, it would leave the EU no choice but to challenge Washington at the World Trade Organization, EU officials and diplomats told Politico.
Macron's remarks "are clearly a response to the Inflation Reduction Act," said Elvire Fabry, a trade policy researcher at Paris' Institut Jacques Delors. “Macron plays the role of the bad cop, compared to the European Commission, which left Washington some political room to make adjustments,” she noted.
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