EU expresses concern over potential impact of US Inflation Reduction Act

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EU expresses concern over potential impact of US Inflation Reduction Act

The member states of the European Union on Friday expressed concern about the discriminatory provisions in the US Inflation Reduction Act IRA and the potential consequences of the IRA on the competitiveness and investment decisions of the EU industry in particular as regards sectors of crucial importance for its transition to a green economy.

According to Jozef Sikela, chair of the EU Trade CouncilEU Trade Council, "We are very concerned about the potential impact of the US Inflation Reduction Act on the EU's manufacturing base.

Many of the green subsidies provided by the act discriminate against EU automotive, renewables, battery and energy-intensive industries. EU Trade Commissioner Valdis Dombrovskis said these concerns are serious for the EU, and many of my colleagues have raised concerns with our US interlocutors.

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He said that we are asking for fairness. We want European companies and exports to be treated the same way in the US as American companies and exports are treated in Europe. Sikela and Dombrovskis both emphasised the need to avoid a subsidy race between the EU and the US, arguing that it would be dangerous, expensive and inefficient.

These issues are now being discussed in a joint high-level task force. The next opportunity to take stock of the situation will be on December 5, at the Trade and Technology Council TTC meeting. The TTC is a platform that enables the EU and the US to coordinate approaches to key global trade, economic and technology issues, and to deepen transatlantic trade and economic relations.

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In the current geopolitical context, we need to build alliances in these important sectors - be that batteries, renewable energy or recycling, Dombrovskis said.

The IRA provides $369 billion for climate and energy provisions, as well as a record amount of carbon and energy provisions in mid-August. The landmark package includes tax credits for electric cars made in North America and supports US battery supply chains.