The European Commissioner for the Internal Market, Thierry Breton, assured Tuesday “to work” on measures “comparable” to the massive American subsidies of the climate plan of Joe Biden, in order to protect European industry against the risk of “distortion” of competition.
“We have to react, we cannot remain inactive”, declared Mr. Breton during an economic meeting in Madrid. ” It’s not too late. We need to send a strong message to our industry,” he added.
The commissioner said “work hard to come up with something that can be compared” to the American plan. These proposals will be presented “very quickly”, he insisted.
Brussels has been worried for several months about the effects of the Inflation Reduction Act (IRA), a 420 billion dollar plan by American President Joe Biden largely devoted to the climate and adopted last summer.
This plan provides, among other things, for reforms and subsidies favoring companies established in the United States, particularly in the electric vehicle or renewable energy sectors.
The European Union is calling for more “coordination” and fears that its companies will flee across the Atlantic. “Every day, I am told examples” of companies having given up on “investing in Europe”, admitted Mr. Breton on Tuesday.
One of the main points of tension, according to him, is the subsidy of up to $7,500 granted for the purchase of an electric vehicle manufactured in the United States, Canada or Mexico.
“This will create a” trade barrier “unacceptable” and contrary to “WTO rules”, judged Mr. Breton, recalling that discussions were underway with Washington on this subject.
In detail, the EU’s response to the IRA will be “three-pronged”, Mr Breton said. A regulatory component, intended to accelerate the growth of European “green tech” (green economy); a financial component, so that all Member States have access to the resources needed to support this sector; and the creation of a “sovereign fund” capable of investing in European industrial projects.
The first two components will be presented at the European Council on February 9 and the third “could be defined rather during the second half of the year”, according to Mr. Breton.
The President of the European Commission, Ursula von der Leyen, estimated in early December that the EU should take “rebalancing” measures to iron out the “distortions” of competition caused by the American plan.
The Europeans are however divided on the response to be given to the IRA, Paris pleading for example for a common European financing while Berlin advocates more dialogue with Washington.