Germany wants joint European response to US Inflation Act

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Germany wants joint European response to US Inflation Act

BERLIN Reuters -- Germany wants a joint European response to the U.S. Inflation Reduction Act that would involve simplifying rules on state support and expanding funding opportunities, according to a German finance ministry document seen by Reuters on Friday.

The EU could set up a programme to promote green technology by combining various funding elements in order to avoid budget constraints, such as the Innovation Fund could increase support for large-scale projects for clean technologies, or the European Investment Bank EIB could take on more risk through guarantees, it said.

The ministry document suggests that member states could anchor sustainability criteria more firmly in public tenders at the national level, as well as extend or increase traditional subsidy programmes, but warns against local content requirements favouring domestic industry.

According to the document, these would not only contradict World Trade Organization WTO law, but could also lead to further erosion of the world trade order. European Union countries welcome Washington's investment drive for green technology, but they claim 200 billion euros $207 billion of US subsidies for locally produced content that could break WTO rules by disadvantaging their companies.

The EU and Washington have formed a joint task force in hopes of resolving the dispute over the $430 billion act.