French President Emmanuel Macron and Spain's Prime Minister Pedro Sanchez announced on Thursday that they had agreed on a common position on how to respond to a brewing trade dispute with the United States over alleged protectionism.

"We are both aware of the fact that we need to react in a very proactive way" to Washington's massive investment plan to accelerate the US transition to green energy, Macron said after he and Sanchez signed a treaty in Barcelona. 

Europe fears that the Inflation Reduction Act (IRA), which will pour billions of dollars into climate-friendly technologies, will distort transatlantic trade to give American companies an unfair advantage. 

On his part, the Spanish Prime Minister that "Europe is facing a critical moment because of the (Ukraine) war, but also because of trade decisions being taken by Europe's allies such as the United States."

"We welcome the fact that the United States is joining the shift to green energy, but I believe we have to reach an agreement in which this commitment... does not mean the deindustrialization of Europe," Sanchez indicated.

Earlier, Macron and Sanchez signed a friendship and cooperation treaty reinforcing bilateral ties on issues such as migration, defense, and energy.

The Macron-Sanchez summit comes just three months after Paris, Madrid, and Lisbon agreed to build a massive underwater hydrogen pipeline connecting Barcelona and Marseille that will be key for the EU’s energy independence.

Europe is currently trying to obtain exemptions to the IRA to minimize the harm to its industries. 

But Macron, who has denounced the plan as "super aggressive", wants Brussels to quickly follow suit with a similar massive initiative to avoid a flight of European companies relocating to take advantage of the US subsidies. 

Seeking Madrid's backing for his uncompromising stance on the brewing dispute with Washington was a key aim of Macron's visit to Barcelona and on Sunday he will meet with German Chancellor Olaf Scholz for further support.  

Last week, the European Internal Market Commissioner, Thierry Breton, told a business forum in Madrid that the EU was planning new subsidies to promote in-house green technologies and to counter the US plan, which European carmakers see as protectionist.

Read more: Nationwide union strikes in France take place against Macron reforms