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Brussels warns that the 'Biden plan' discriminates against the European electric car

2022-08-11T10:38:52.333Z

The Commission requires the US to withdraw from the fiscal plan measures that it believes favor purchases of cars manufactured on the other side of the Atlantic



Joseph Biden's flagship plan threatens to become a new trade battle between the United States and Europe.

The fiscal stimulus law promoted by the US president has already been approved by the Senate, although it still does not have the approval of the House of Representatives, and Brussels warns that in its current wording "it is clearly discriminatory" with electric vehicles that They are manufactured in the EU, as a spokesperson for the European Commission explains to EL PAÍS.

This has led the Executive chaired by Ursula von der Leyen to demand in writing and orally before the Department of State and Commerce that these "discriminatory elements" disappear from the text "to ensure that it complies with the rules of the World Trade Organization ( WTO)”.

Nobody expected that the mere arrival of Biden to the White House would resolve all the trade conflicts between Brussels and Washington at a stroke, both those that Donald Trump opened and those that came from before.

In fact, in American political history it is easier to find Democrats on the protectionist side than Republicans, at least until the New York tycoon's arrival in the White House and without forgetting the resounding caveats of some decisions by George Bush Jr.

However, with this Administration in Washington, relations on both sides of the Atlantic have improved a lot and several conflicts have begun to be resolved: in June 2021, for example, the Airbus-Boeing conflict, opened in 2004, was suspended for five years. , and the tariffs that both parties applied for this fight,

which amounted to about 10,300 million euros;

furthermore, four months later talks began to end disputes over aluminum and steel.

Now, on the other hand, this obstacle arises when the two partners are much more attentive to China and to see how the demands they impose on the Asian giant to compete with it on equal terms increase.

The problem that the European Commission claims to have detected was already seen in previous versions of the text.

This would have led the vice president of the Community Executive Valdis Dombrovskis to transmit his complaints to the US ambassador to the EU, Katherine Thai, in September and October of last year, and to send letters to the leaders of the Democrats and Republicans in Congress.

One of these letters, sent on October 29, 2021, was signed jointly with authorities from Canada, Mexico and South Korea, community sources point out.

"Measures like these go against recent efforts to rebuild our relationship to resolve past problems and avoid adding new points of tension," they add.

The movements have apparently continued in recent weeks.

Taking advantage of the so-called Inflation Reduction Act, the Biden Administration has included measures to stimulate the manufacture of electric cars in the United States.

Europe likes this.

“The EU agrees that tax credits can serve as an important incentive to boost demand for electric vehicles.

This is crucial to promote the transition towards a sustainable mobility sector and reduce greenhouse gas emissions”, add the community spokespersons, after all, the Von de Leyen Commission has made the fight against climate change its main priority.

But from here the discrepancies begin.

An employee was working on a Volkswagen ID electric series model at the Hannover plant on June 16. picture alliance (dpa/picture alliance via Getty I)

Violation of WTO rules

What worries Brussels is that in order to have access to fiscal aid there are requirements that punish electric vehicles and components manufactured in the European Union.

One of Washington's demands is that the minerals used to build the car and its parts have been extracted in the United States, have been recycled there or come from countries with which it has a free trade agreement.

The other condition, which Brussels also considers "discriminatory", provides that the tax relief, which would reach 100% in 2028, would apply to batteries and vehicles assembled in the country.

“It favors certain countries rich in mineral resources, the production of batteries and the assembly of cars in North America, to the detriment of EU products exported to the United States”, they conclude in the European capital, to the point that they believe that It goes beyond the rules established by the WTO.

The automotive manufacturing sector around the world is facing a difficult situation.

The pandemic caused supply chains to break down and component shortages, especially semiconductors.

At the end of the crisis caused by the coronavirus, the situation was aggravated by the rapid increase in demand, which put more pressure on these chains, to which the war in Ukraine and the growing tension between China and Taiwan have now been added. , one of the areas with the highest maritime traffic in the world.

And, below this juncture, is the structural transition that manufacturers have to make, from vehicles powered exclusively by fossil fuels to hybrids or those that only use electricity.

Precisely, the latter is what underlies this potential commercial conflict: the future of the sector goes through this type of car;

Biden's plan wants to stimulate sales of cars and components made there;

The United States became in 2021 the main destination for European vehicle exports (almost 26,000 million of the 140,000 million euros sold outside the EU) in 2021;

and, finally, the trade balance of the Twenty-seven in this sector, both with the US and with the rest of the world, is frankly favorable to Europe, at 18,000 million and 73,500, respectively.

These four brushstrokes and the data that accompany them explain, to a large extent, the interests that the two commercial giants are playing here in an industry that generates stable and well-paid employment.

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Source: elparis

All business articles on 2022-08-11

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