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The EU-US row: No breakthrough in subsidy talks

Status: 06.12.2022 06:05 AM

There is no quick resolution in sight in the row between Brussels and Washington over billions in US subsidies. Neither side reported any tangible progress after a round of negotiations in the US state of Maryland.

European Union officials failed to achieve a breakthrough in talks with the US government over its opposition to regulations that exclude EU electric cars from US tax credits.

After the third ministerial meeting of the so-called Trade and Technology Council, the two sides only issued a joint statement promising to work constructively on a solution. “We are aware of the EU’s concerns and affirm our commitment to addressing them constructively,” she said.

US electric car premiums are a thorn in the side of the European Union

EU Trade Commissioner Valdis Dombrovskis called the new $430 billion inflation-cutting law discriminatory and urged changes before the end of the year. Among other things, the law gives car buyers a $7,500 tax credit for new purchases of electric vehicles manufactured in North America.

The European Union fears that the law will seriously harm Europeans. French President Emmanuel Macron recently called it a “job killer” for Europe. US President Joe Biden responded that the law could still be amended. How this is done is not clear.

It was said around France that they hoped for an executive order from the White House. Then it would not be necessary to review the law by the US Congress – a step that the US government would also like to avoid.

The law offers great subsidy incentives

The Inflation Reduction Act offers very large subsidies and drastic tax cuts and combines them with domestic production regulations. US purchase premiums for electric vehicles are only available if the vehicle is assembled in America and a certain percentage of the battery is manufactured there.

Critics see the danger that in the future the US will bring so much investment into their country with a law that violates WTO rules that other countries will then get nothing.

efforts to make progress

US Secretary of State Antony Blinken said on Monday after six hours of talks that practical and tangible progress had been made on key issues and that he was confident the tax credit issue could be resolved.

Dombrovskis said before the meeting that the new US law threatens to undermine progress in trade relations. “Inflation Act” means two steps back. After the meeting, he said he was “more optimistic”.