Macron slams IRA subsidies on first day of state visit to Washington

By Al Mayadeen English
Source: Agencies
1 Dec 2022 00:09

The group of lawmakers and business people had just invited him to lunch ahead of his meeting with US President Joe Biden scheduled on Thursday.

French President Emmanuel Macron

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.

The French head of state will remain in the US on an official five-day visit that kicked off yesterday and will last through December 3. He is set to meet with Biden in Washington on December 1.

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.

In addition, there are more tax credits for electric vehicles, electrical panels, heat pumps, and many other products directly related to the renewables industry.

The bill promises to put the difference of about $300 billion toward deficit reduction. It will also provide $369 billion in funds for energy security and climate change. $64 billion will be allocated to the Affordable Care Act over the next ten years.

Moreover, it will raise $739 billion in revenue by imposing a 15% corporate minimum tax. Printing that much more money to solve inflation does not seem to be a valid approach. But because the US dollar is the global reserve currency, there is no real trouble it that.

The bill will also aim to reform prescription drug pricing policies, boosting Internal Revenue Service tax enforcement and addressing the carried interest loophole.

On November 25, a report published by Politico revealed that several senior EU officials were blaming the US for "fracturing" the West and making "EU countries suffer" at the expense of Biden's campaign to support Ukraine.

According to the report, officials accused the US of amassing enormous profits out war as the US is seen "selling more gas at higher prices" and "selling more weapons."

It further stated that public opinion is shifting in many EU countries against the US' subsidy program.

"The Inflation Reduction Act is very worrying," said Dutch Trade Minister Liesje Schreinemacher. "The potential impact on the European economy is very big."

On November 29, another report by Politico showed that Macron's visit to the US will mark a turning point for Europe, as it will be the EU's last chance to convince the US to pursue a less strict Inflation Reduction Act and steer clear of a trade war.

Macron wants to know whether his American counterpart would be able to offer Europe cheaper gas and provide it with access to its multi-billion-dollar green industry subsidy scheme, the report states.