While officials from the United States and the European Union touched on other issues such as the spillover effects from the conflict between Russia and Ukraine and a joint road map to assess trustworthy artificial intelligence technologies, it was the US Inflation Reduction Act that dominated trade discussions on Monday.
The act, designed to speed up the US transition to a low-carbon economy, contains around $370 billion in subsidies for the green energy industry in the US, as well as tax breaks for US-made electric cars and batteries. The EU has been in arms because of this. The US-EU Trade and Technology Council meeting on Monday was part of a move to resolve the dispute and to grow the bilateral trade and investment relationship, according to a statement from the US National Security Council.
The EU believes that subsidies are a job killer and will decimate the green industries in Europe.
The EU initiatives on the transition to a green and digital economy have made European industries more competitive, but the competitiveness will be wiped out by the US subsidies.
EU Internal Market Commissioner Thierry Breton did not take part in the meetings, but he said they did not give enough time to address issues of concern to European industry ministers and businesses.
Breton threatened to take the matter to the World Trade Organization and take retaliatory measures if the United States doesn't drop subsidies. The US has offered some olive branches. A European official who was involved in the talks last week dismissed the assessment on Monday, saying they would be extremely difficult to realize, because they said they would be very difficult to achieve because of the potential tweaks to the act that US President Joe Biden mentioned as a possibility last week.
The EU should be aware that the US will expect a price to be paid for any concessions, despite the fact that the EU was leaving it slightly more optimistic than it was on entering it, as stated by Valdis Dombrovskis after the meeting.
The EU should look at the bigger picture. The world is made up of more countries and regions than the US and the EU, and if the two giants adopt subsidy policies that will make it harder for the rest of the world.
The EU should be working with other economies to make the world flatter for the benefit of all, not competing with the US to see which of them can build the biggest wall.