Home MarketsEurope & Middle East Still ‘discriminatory’ measures in US deflationary law: EU’s Valdis Dombrovskis

Still ‘discriminatory’ measures in US deflationary law: EU’s Valdis Dombrovskis

by SuperiorInvest

The European Union still trusts the president Joe BidenThe inflation-reduction law discriminates against companies in the bloc, its top trade minister said on Thursday.

However, Valdis Dombrovskis told CNBC that the EU is engaged in ongoing negotiations with US officials, which so far have only allayed some of its concerns. He noted that he met with US Trade Representative Katherine Tai two days ago, in a meeting where the pair pledged to increase engagement on key issues including subsidies for electric vehicles.

“Our concerns are discriminatory measures [the] The US anti-inflation law that discriminates against EU companies,” he said in an interview at the World Economic Forum in Davos, Switzerland.

“We think we should tackle climate change and the green transition together, building transatlantic value chains, not tearing them down.”

The IRA was approved by lawmakers in August and includes a record $369 billion in climate and energy policy spending. Met with quick critique from EU member countries who feel that a number of its provisions — including green subsidies, such as tax credits for electric cars made in North America — threaten European industry.

Asked by CNBC’s Geoff Cutmore if there was any risk of the dispute escalating into a trade war, Dombrovskis said: “We are currently focused on negotiated solutions, reaching out to the US authorities at various levels.”

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“We have a dedicated EU-US working group that is continuing its work. We have made some progress, some of our concerns are being addressed, but there are still concerns that need to be addressed.”

As for what the EU’s reaction would be if it was not satisfied with the outcome of the negotiations, Dombrovskis said that now “it’s not about shooting sabers”.

He added that the bloc was working on its broader economic policy response to competitiveness issues given the problems associated with high energy prices and the war in Ukraine, as well as the IRA.

This is to include a review of existing EU subsidies and funds and whether they are being used most effectively.

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Dombrovskis also said he was seeking to adjust the EU’s strict state aid rules to allow member states to give more support to companies helping the green transition, as European Commission President Ursula von der Leyen had previously demanded.

“But of course we have to define it carefully to maintain a level playing field in the EU single market,” Dombrovskis said.

Irish Finance Minister Michael McGrath told CNBC on Wednesday that the EU wants to avoid a “subsidy race” with the US and that any changes to state aid rules must not benefit countries that have the “means and resources” to provide more support to companies than others .

Meanwhile, Spanish Prime Minister Pedro Sánchez said Monday The EU could learn from the IRA.

“We need to reform some internal aspects of our industrial policies, such as state aid, reducing bureaucracy and try to send a message to the whole industry that this is Europe, and of course Spain, this is a good place,” he added.

—CNBC’s Silvia Amaro contributed to this article.

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