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Von der Leyen warns Biden of "an adequate response" for American subsidies for electric cars and batteries


"We must adapt our State aid to the new global environment," says the President of the European Commission

The European Union must not sit idly by in the face of the subsidies that the United States has approved for its industry for electric cars, batteries or material for renewable energy installations.

"The EU will respond in an appropriate and well-calibrated way," the president of the European Commission, Ursula von der Leyen, warned this Sunday, just one day before delegations from both parties at the highest level meet near Washington.

It is not about opening a trade war "in the midst of the current war", she has clarified in regency to Ukraine.

What the German proposes is to “reflect” on the continental State aid rules “to adapt them to the new global environment”.

Von der Leyen herself has developed the idea in her speech this Sunday at the College of Europe in Bruges (Belgium).

“The IRA (the recent US law that gives subsidies), invests throughout the entire value chain in strategic sectors.

This is not always the case with our state aid.

We must take a fresh look at how to support the entire value chain, moving down to mass production of strategic green technology solutions and clean end products.

Even through public investment”.

In other words, open your hand so that aid can be given to European companies or those that produce on European soil so that they are competitive and do not take production to other areas.

The energy and digital transition, together with what happened during the pandemic, have highlighted that Europe has lagged behind in key strategic industrial sectors to carry out this transition.

And it has done so when the EU has self-imposed objectives such as banning the sale of vehicles with combustion engines by 2035. If European political and business leaders spend all day talking about "strategic autonomy", they do not only do it for defense, so do the economy.

The signal that something is moving in Brussels for this reason already came at the beginning of the year, when it launched a plan that intended to move 43,000 million euros to launch the production of microchips, although only 11,000 million of that amount was new money, the The rest was a rearrangement of items.

The United States has also reacted, especially in the environmental revolution and the decarbonization of the economy and transportation.

The Government of Joseph Biden has taken advantage of its star regulation, the Anti-Inflation Act (IRA), to include an aid package for the energy transition of about 370,000 million dollars (about 350,000 million euros ).

It includes aid for the purchase of electric vehicles manufactured in the United States with components made there.

Brussels gave the alert voice even before the US Congress finally approved the rule.

He warned that it is "clearly discriminatory" and goes against the rules of the World Trade Organization (WTO).

It was of little use.

The standard was approved.

Governments such as Germany or France have joined the community alarm, in fact, on the trip that French President Emmanuel Macron has made these days to Washington, this issue was a prominent issue.

Despite the fact that the Commission was the first to launch the alert, later the capitals have been the ones that have complained the most, especially those with large interests in the automobile sector, such as Paris and Berlin.

Brussels, as von der Leyen has made clear, does not want to open "an expensive trade war with the United States in the midst of the current war."

In other words, he does not see it as clear to take Washington to the WTO courts so that they agree with him in a few years and then open negotiations with the United States or be able to impose response measures for the same amount as the damage caused.

So he has chosen to try to talk with the Biden Administration to see if there are options to find solutions in the regulations that must be used to apply the IRA.

golden opportunity

This Monday both parties will have a golden opportunity to address the issue at the meeting that both parties hold in Maryland, in the United States, in the so-called Council of Commerce and Technology (TTC, for its acronym in English).

Community sources pointed out on Friday that in principle this body "has nothing to do" with the open conflict over subsidies.

However, it seems difficult not to address this matter in a forum in which the US Secretary of State, Anthony Blinken, the Secretary of Commerce, Gina Raimondo, and the ambassador to the EU, Katherine Tai, will be present, for one side, and the vice-presidents of the Commission, Margrethe Vestager and Valdis Dombrovskis, plus the Commissioner for the Internal Market, Thierry Breton.

The depth of the problem created with these subsidies is underlined by the creation of an ad hoc

bilateral body

, a

task force

, to find a solution.

This forum has already met on several occasions, although it is still unknown if there is any progress.

The will to find a solution that can be intuited from the creation of this forum collides with the pessimism that exists in Brussels.

A few days ago, diplomatic sources explained that the European side was encountering a problem when speaking with the Americans: the latter are already demanding proof of the detrimental impact of their law on the EU.

The answer given is that proof of something that has not yet happened cannot be presented because the law has barely been approved and that for now there are analyzes of potential risks.

Source: elparis

All business articles on 2022-12-05

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