Macron US visit last chance to avert trade war - reports
The European Union is extremely concerned about the threat that the United States poses to the two countries through its Inflation Reduction Act, with President Macron heading to the US for talks about the issue.
French President Emmanuel Macron's visit to the United States this week will mark a turning point for Europe, as it will be the old continent's last chance to convince its biggest ally, the United States, to convince President Joe Biden to pursue a less strict Inflation Reduction Act and steer clear of a trade war, US newspaper Politico reported on Tuesday.
The French head of state will go to the United States on an official five-day visit that will kick off today and will last through December 3. He is set to meet with Biden in Washington on December 1.
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 newspaper said.
Additionally, it noted that Biden refusing to make concessions on the inflation legislation, a "transatlantic trade war would be more or less inevitable."
In the European Union's belief, Washington should show greater solidarity with Europe, which itself is suffering under the sanctions imposed on Russia, the report added.
"There’s a risk that imbalances will worsen as the EU pays higher energy prices and the US takes measures to boost investment in industry," an Elysee Palace official told Politico.
Macron would have achieved his goals if the European allies would be able to receive the same rights in subsidy deals under the aforementioned legislation that Europe is currently fearing as US, Canadian, and Mexican companies, the report stressed.
Macron and German Chancellor Olaf Scholz seem to agree that they should potentially hit back against the United States over the unfair competition it has created, US media outlet Politico said last month.
The two European leaders agreed that recent subsidy plans made by the US, which they saw represented measures that shift the market in distorting manners aimed at convincing companies to produce their products in the US, people familiar with the matter told Politico.
They underlined that this posed a problem to the European Union and agreed that Brussels should work on addressing it.
A senior French economy ministry official also told Politico on Tuesday that the United States was not likely to abandon its measures to reduce inflation.
If Washington follows through with that, the Europeans would have to choose whether they adhere to protectionism and risk engaging in a subsidy competition with the US that they cannot afford in light of the continuously rising energy and food prices all across the EU. Alternatively, according to the report, they can resort to watching the rest of the world "build up protectionist walls."
The Inflation Reduction Act, signed by Biden in August, would allocate $300 billion toward deficit reduction and provide some $369 billion in funding for energy security, including handing out tax credits for US-made electric vehicles, imposing subsidies for US consumers, and $80 billion to increase Internal Revenue Service tax enforcement and operations.
Though Macron and Scholz seemed to come to an agreement in October, the two heads of state were bickering for days over central political, energy, and defense issues, but they were in complete disagreement that their 27-nation bloc cannot remain idle in the face of Washington pushing ahead with its Inflation Reduction Act offering tax cuts and energy benefits for corporations that invest in the US if the bill maintains the same text it currently has.
Europe is also concerned about how the legislation is encouraging consumers to purchase American products when it comes to electrical vehicles, which would cause a world of hurt for European manufacturers, especially automobile giants France and Germany.
The European pair practically said that Brussels would have to strike back if the US does not scale back, as the way Washington is acting would likely plunge it into a new trade war with its closest European allies.
"We need a Buy European Act like the Americans, we need to reserve [our subsidies] for our European manufacturers," the French President said.
Berlin has long been very nonchalant when it comes to its trade dispute with the United States, but now it is in support of the European push in the face of Washington, with Scholz agreeing that the bloc should implement countermeasures similar to those of the US if the latter chooses to ignore Germany and France's concerns.
Scholz had underlined that Europe will need to discuss the Inflation Reduction Act with its ally across the Atlantic ocean "in great depth" due to the various issues it imposes on the EU.
Though the threat is on the table, the two European leaders would rather reach a negotiated solution with Washington, one that involves an "EU-US Taskforce on the Inflation Reduction Act" established by European Commission President Ursula von der Leyen and US Deputy Security Adviser Mike Pyle earlier.
Macron, meanwhile, called out US "double standards" for selling gas to Europe at prices 3 to 4 times higher than it is sold in the US domestic markets.
"American gas is 3-4 times cheaper on the domestic market than the price at which they offer it to Europeans. These are double standards," Macron stated. "It concerns sincerity in transatlantic trade" and that this issue should be addressed.