European finance ministers concerned about US state aid

In the margin of a meeting in Brussels on Monday, several European finance ministers criticised large-scale US state aid for the green economy, as this can seriously harm European companies. As a result, the European Commission has set up a joint task force with the US to discuss the issue.

The concerns are about the Inflation Reduction Act (IRA) signed by US president Joe Biden in August, which contains hundreds of billions of dollars of support for building a green economy. For example, buyers of electric cars can pocket up to 7,500 US dollars in tax breaks, provided the car rolls out of a North American factory and is equipped with a locally produced battery.

"We expect the European Commission to make proposals to formulate a strong response to this US policy," French minister Bruno Le Maire said before deliberations began. US subsidies are said to be four to ten times higher in some instances than what the Commission allows. According to Le Maire, billions of investments and thousands of industrial jobs are at stake.

"Perhaps this is the right time to reach out to the US."

His German colleague Christian Lindner also noted that the US plans would seriously affect the European economy. However, he warned of a trade conflict that would produce only losers and urged dialogue with Washington. He said this could also pave the way for a new trade deal. "Perhaps this is the right time to reach out to the US, session again in trade policy as well," he said. ​

For now, the Commission prefers dialogue to, say, a complaint to the World Trade Organisation (WTO) or retaliatory measures. That is why a joint task force with the US was set up last month to discuss the issue. The Commission hopes the EU, following the example of Canada and Mexico, can make an exception.

We should be able to discuss these issues when we see these kinds of concerns."

"Right now, we are focusing on the work of the task force and the solutions that can be found in this framework," vice-president and European Trade Commissioner Valdis Dombrovskis said. How smoothly those talks go will be seen on 5 December at the EU-US Trade and Technology Council.

Belgian Finance minister Vincent Van Peteghem (CD&V) supports the task force. "It is always important to have good relations with the US. We should be able to discuss these issues when we see these kinds of concerns."

^{© Mario Tama/Getty Images/AFP}