The member states of the European Union (EU) on Friday voiced their concern about the discriminatory provisions contained in the U.S. Inflation Reduction Act (IRA) and likely significant repercussions of the IRA on the competitiveness and investment decisions of the EU industry, in particular as regards sectors of crucial importance for its transition to a green economy.
"We are very concerned about the likely significant impact of the U.S. Inflation Reduction Act on the EU's manufacturing base," Jozef Sikela, chair of the EU Trade Council, said after a meeting of the member states' trade ministers.
"Many of the green subsidies provided for in the act discriminate against EU automotive, renewables, battery and energy-intensive industries. These are serious concerns for the EU, which I, and many of my colleagues, have raised repeatedly with our U.S. interlocutors," EU Trade Commissioner Valdis Dombrovskis said.
"What we are asking for is fairness," he said. "We want and expect European companies and exports to be treated in the same way in the U.S. as American companies and exports are treated in Europe."
Sikela and Dombrovskis both underlined the need to avoid a "subsidy race" between the EU and the U.S., explaining that it would be dangerous, expensive and inefficient.
These issues are now being discussed in a joint high-level task force. The next opportunity to take stock of the situation will come on December 5, at the Trade and Technology Council (TTC) meeting. The TTC is a platform that enables the EU and the U.S. to coordinate approaches to key global trade, economic and technology issues.
"In the current geopolitical context, and keeping in mind our shared green targets, we should be building alliances in these important sectors -- be that batteries, renewable energy or recycling," Dombrovskis said.
Signed in mid-August, the IRA provides a record $369 billion for climate and energy provisions. The landmark package comprises tax credits for electric cars made in North America and supports U.S. battery supply chains.