US President Joe Biden’s offer to fix provisions in his flagship climate package to help US allies is a ‘breakthrough’ that will help assuage European anger over potential damage to his own green tech companies, he said. said French Finance Minister Bruno Le Maire.
The Mayor was speaking after French President Emmanuel Macron pressed Biden during a three-day state visit to Washington to examine the damage the law known as the Cut Inflation Act could have on the EU. Macron had called the $400 billion in incentives to fund America’s green transition “super aggressive against European businesses” and risked “fracturing the West” by unfairly distorting competition.
But Macron and the US president have made significant progress in their discussions on the IRA, Le Maire said, and officials will now work closely on the details in the coming weeks.
“I really think the state visit. . . is a turning point,” he told the Financial Times.
A particular sore spot has been subsidies for US-made electric cars, which the EU, South Korea, Japan and the UK have all criticized as discriminating against their companies and in violation World Trade Organization rules.
Speaking at a joint press conference on Thursday, Biden said he was ready to address EU concerns since the US intent was not to damage the region, nor to exclude allies. Rather, the IRA was aimed at boosting US supply chains to reduce reliance on Chinese products in clean energy and electric cars, he said.
“There are adjustments we can make that can fundamentally make it easier for European countries to participate or become autonomous, but that still needs to be ironed out,” Biden said.
Biden mentioned a potential change: reworking a provision of the law that grants exceptions to locally made content rules to allow subsidies on electric vehicles and renewable energy technologies as long as the relevant country has a free trade agreement. with the United States.
“This was added by a member of the United States Congress who acknowledges that he was simply talking about allies; he didn’t mean, literally, a free trade agreement. So we can do a lot of things. »
The Mayor said such a change would represent an important victory for Europe and help ensure that businesses in the region could remain competitive in the race towards a low-carbon economy.
“It’s a major breakthrough to say: these are our allies, these are our friends, so even if we don’t have a trade agreement with Europe, we will consider European components in the same way as those of country with a trade agreement,” he said.
“It’s not an adjustment, it’s an important policy choice” by the Biden administration, he added.
It remains to be seen how such a change would be implemented, given that the IRA legislation itself is unlikely to be reopened or amended. French officials have suggested this should be possible through presidential decrees or through regulations setting out how the law is to be enforced.
The White House declined Friday to comment further on the specific changes being considered. “The President has made it clear that there are ways to address Europe’s concerns. This is an issue we are working on through extensive consultations with our European partners,” the White House spokesperson said. “We are not going to preempt this process.”
A task force formed by U.S. and European officials will continue to meet to resolve issues with the IRA, and the issue will also be addressed at a meeting of the U.S.-Europe Trade and Technology Council. EU on Monday.
Asked if Macron had threatened Biden to take the case to the World Trade Organization, Le Maire replied that he didn’t have to since the strategic objectives of both countries were the same: to build strong industries. in green technologies.
“Nobody wants a trade war in the situation we find ourselves in,” he said, referring to the war in Ukraine and the economic fallout from rising energy prices.
“We have a competitor called China. The strategic objective of the United States, it seems to me, is not to weaken Europe but, on the contrary, to work in partnership with Europe.
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