European Frustration Over U.S. Subsidies Mounts Ahead of Key Meeting
BRUSSELS—Simmering frustration over the “Buy American” provisions attached to a sweeping package of climate-related subsidies threatens to spoil the mood at a high-level U.S.-European Union meeting Monday.
EU leaders say the subsidies, which were included in the Inflation Reduction Act legislation that President Biden signed into law in August, are discriminatory and risk accelerating damage to European industries already struggling with high energy costs. South Korea, Japan and the U.K. have also criticized the decision to attach local-content requirements to the subsidies.
Mr. Biden said Thursday that he was open to concessions, but didn’t commit to specific changes.
Tensions over the legislation are expected to overshadow a planned Trade and Technology Council meeting between U.S. and EU officials Monday. The council was established in 2021 under the Biden administration, which has sought to smooth relations with the EU following trade confrontations under former President
Donald Trump.
European leaders and industry groups have become increasingly vocal in recent weeks about the legislation, however. Lobby group BusinessEurope said Friday that the U.S.’s climate and clean-technology ambitions “must not come at the expense of European interests.” The group called for negotiations to address elements in the legislation it said were discriminatory.
Late Thursday, a top EU official said he was canceling his plans to attend Monday’s meeting.
Thierry Breton,
the bloc’s internal market commissioner, won’t attend because the agenda “no longer gives sufficient space to issues of concern to many European industry ministers and businesses,” according to a statement from his office.
Mr. Breton is focusing on preserving the competitiveness of Europe’s industrial base and will travel to Washington early next year for bilateral meetings, the statement added.
The U.S. legislation includes a tax credit for electric vehicles that meet certain local-content requirements, including undergoing final assembly in North America. That provision has drawn particular concern from U.S. allies who say it could harm automotive production in Europe, Japan and South Korea.
A U.S.-EU task force set up recently to discuss the legislation has so far failed to ease European concerns.
“Probably all the member states are concerned about the Inflation Reduction Act,” said Jozef Síkela, minister of industry and trade in the Czech Republic, which holds the EU’s rotating presidency. Mr. Síkela said last week that the subsidies could represent a threat to European production, but added that he considers a subsidy race to be “a dangerous game.”
Other officials, including French President
Emmanuel Macron,
have called for Europe to introduce its own measures to counter the subsidies. Even Ireland, which is unlikely to be affected significantly by the U.S. move, expressed openness to the possibility of boosting European subsidies.
“No one wants to get into a tit-for-tat or a subsidy race, but what the U.S. has done really isn’t consistent with the principles of free trade and fair competition,” Ireland’s trade minister,
Leo Varadkar,
said last week.
Write to Kim Mackrael at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
BRUSSELS—Simmering frustration over the “Buy American” provisions attached to a sweeping package of climate-related subsidies threatens to spoil the mood at a high-level U.S.-European Union meeting Monday.
EU leaders say the subsidies, which were included in the Inflation Reduction Act legislation that President Biden signed into law in August, are discriminatory and risk accelerating damage to European industries already struggling with high energy costs. South Korea, Japan and the U.K. have also criticized the decision to attach local-content requirements to the subsidies.
Mr. Biden said Thursday that he was open to concessions, but didn’t commit to specific changes.
Tensions over the legislation are expected to overshadow a planned Trade and Technology Council meeting between U.S. and EU officials Monday. The council was established in 2021 under the Biden administration, which has sought to smooth relations with the EU following trade confrontations under former President
Donald Trump.
European leaders and industry groups have become increasingly vocal in recent weeks about the legislation, however. Lobby group BusinessEurope said Friday that the U.S.’s climate and clean-technology ambitions “must not come at the expense of European interests.” The group called for negotiations to address elements in the legislation it said were discriminatory.
Late Thursday, a top EU official said he was canceling his plans to attend Monday’s meeting.
Thierry Breton,
the bloc’s internal market commissioner, won’t attend because the agenda “no longer gives sufficient space to issues of concern to many European industry ministers and businesses,” according to a statement from his office.
Mr. Breton is focusing on preserving the competitiveness of Europe’s industrial base and will travel to Washington early next year for bilateral meetings, the statement added.
The U.S. legislation includes a tax credit for electric vehicles that meet certain local-content requirements, including undergoing final assembly in North America. That provision has drawn particular concern from U.S. allies who say it could harm automotive production in Europe, Japan and South Korea.
A U.S.-EU task force set up recently to discuss the legislation has so far failed to ease European concerns.
“Probably all the member states are concerned about the Inflation Reduction Act,” said Jozef Síkela, minister of industry and trade in the Czech Republic, which holds the EU’s rotating presidency. Mr. Síkela said last week that the subsidies could represent a threat to European production, but added that he considers a subsidy race to be “a dangerous game.”
Other officials, including French President
Emmanuel Macron,
have called for Europe to introduce its own measures to counter the subsidies. Even Ireland, which is unlikely to be affected significantly by the U.S. move, expressed openness to the possibility of boosting European subsidies.
“No one wants to get into a tit-for-tat or a subsidy race, but what the U.S. has done really isn’t consistent with the principles of free trade and fair competition,” Ireland’s trade minister,
Leo Varadkar,
said last week.
Write to Kim Mackrael at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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