French Minister of Finance Bruno Le Maire stepped up demands for the EU to take swift and firm action in response to the climate provisions contained in US President Joe Biden’s new spending initiative.
France is concerned that several provisions in the US Inflation Reduction Act discourage investment in the EU and discriminate against European companies, particularly tax credits for US-made electric vehicles (EVs).
Le Maire said “firm and proportionate” options could include stricter environmental rules, measures to ensure preference for European production, or an acceleration of reciprocity rules. Asked if Europe could lodge a complaint with the WTO, he said the continent should use all options available.
Photo: AFP
“We must react fast. I’m calling for a united, strong and coordinated response from the EU to our American allies,” Le Maire said in an interview with Les Echos. “Only a hard line will allow us to get results.”
The US and the European Commission created a task force last month to try to resolve their disagreements, European Commissioner for Internal Market Thierry Breton said on BFM Business radio.
The EU has presented a letter to that forum with specific points that it believes contravene WTO rules.
“Either they will be resolved there — and we hope they will, that’s why we have the task force, to discuss this — or we will have to go to the WTO and envisage retaliatory measures,” Breton said.
Le Maire said he is struggling in negotiations for investment from a foreign company in the EV sector as the US is ready to offer four times the amount of subsidies.
In total, France estimates that about 10 billion euros (US$9.98 billion) of investment and 10,000 jobs are at stake.
“There is a risk of a major shock for French and European industry,” Le Maire said.
Japan joined the EU in calling planned US aid for local EV manufacturers “discriminatory,” and demanded equal treatment for the nation’s automakers.
The country’s auto industry might hesitate to invest in the electrification of vehicles in the world’s largest economy if the US offers “discriminatory incentives” to local manufacturers, Japan’s government said in a statement on Friday.
“This could cause negative impacts on the expansion of investment and employment in the US,” it said.
A multinational dispute has been raging over the recently passed US Inflation Reduction Act and subsidies to be provided through it to support green technologies in the country. The EU, South Korea and other trading partners see the aid as unfair.
The US should give Japan “treatment no less favorable” than North American countries regarding requirements concerning the final assembly of vehicles, critical minerals used for their manufacture and their battery components, the statement said.
The requirements of the EV tax credit are “not consistent” with the US and Japan’s shared policy to work with allies and like-minded partners to build supply chains, the Japanese government said, adding that the provisions “preclude Japanese businesses from enjoying the benefit.”
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