The president of the European Commission, Ursula von der Leyen, says there is no need to engage in a “trade war” while a real war is still raging. But the Biden administration’s rules on support for American businesses call for a response from Europe. This was discussed in the chancelleries of the Old Continent, as the American president and the Frenchman Macron said at the recent meeting. Now the president of the European executive says that the IRA, the American law for reducing inflation, “is raising concerns in Europe, in a very particular context for our industry and economy” due to Covid which “exacerbated the bottlenecks in many critical supply chains” and due to “Russian aggression which has limited global energy supplies” and this “affects the competitiveness of many European industries, especially the energy-intensive sectors of our economy”.
In his speech in Bruges, Von der Leyen clearly said that “there is a risk that IRA could lead to unfair competitioncould shut down markets and fragment the very critical supply chains that have already been tested by Covid. We need to look closely at these problems and at the same time learn what we could do better”, stressed von der Leyen before announcing a European response to the American initiative. “Europe will always do what is right for Europe. So yes, the EU will respond adequately and well-calibrated to the IRA. But does this mean we will engage in a costly trade war with the United States in the midst of a real war? It is not in our interest or in the interest of the Americans. And it would also hurt global innovation,” he explained.
“That’s why we have to now work so hard in Europe and the United States to address distortions. Over the past two years, the EU and the US have shown that we are stronger individually when we are united collectively. When we focus on what binds us together: our values and friendship, our belief in fair competition and open markets, and our commitment to the rules-based order. For friends like us, competition and cooperation can be two sides of the same coin,” added von der Leyen.
Technically, Brussels is therefore thinking of readjusting the rules on state aid to prevent an exodus of investments caused by generous American subsidies. This is 430 billion dollars with privileged avenues for Made in the USA, which could disadvantage European companies in key sectors such as the automotive sector or the production of green energy technologies. So there is meat on the fire in view of the December 5 meeting of US and EU representatives precisely on technological and commercial matters. “The US Inflation Reduction Act (IRA) should make us think about how improve our state aid frameworks and adapt them to a new global environment”.
“We will also look at how to support the entire value chain, up to mass production of the most strategic green-tech solutions and clean end products. Including through public investment. Our state aid framework exists to preserve our precious single market, but if investment in strategic sectors moves away from Europe, it will only undermine the single market.
That’s why we are reflecting on how to simplify and adapt our state aid rules,” added the president of the EU Commission.
If there is one area, however, in which von der Leyen has no doubts about the need for Atlantic collaboration, it is that of commodity. “Today, the production and processing of some of the critical commodities for the green revolution are controlled by a single country, China. Europe and the United States can build an alternative to this monopoly by establishing a critical commodities club. The idea behind it is simple: cooperation with partners and allies for procurement, production and processing gives us the opportunity to overcome the monopoly.”