The President of the European Commission, Ursula von der Leyen, had said earlier that America and the European Union should invest together in clean technology, and not risk a “devastating trade war.” It revealed the federation’s intention to amend its rules to counter the effects of the American “inflation reduction law”.
The European Commission chief said that in the face of climate change and competition from China, “the United States and the European Union have a broad common interest in maintaining our industrial leadership,” and warned against risking a “devastating trade war.”
This came as concerns grew in Europe about Washington’s recent landmark $700 billion bill called the Inflation Reduction Act, which includes tax breaks for American consumers who buy electric cars with domestically manufactured batteries and in some countries that have free trade agreements with the United States. Although the European Union and the United States are major trading partners, they do not have such an agreement.
The European Union, which includes many major automakers, fears that this will cause losses to its manufacturers, with some calling for a similar public investment policy in response.
“The (US) inflationary law could lead to unfair competition, it could shut down markets, and tear apart the same critical supply chains that have already been tested because of (Covid),” von der Leyen said in a speech delivered at the College of Europe in the Belgian city of Bruges. According to Bloomberg news agency.
She added that the 27-nation European Union should respond by improving its state aid framework to facilitate public investment, re-evaluating the need for more funding to transition to green technologies, and working with the United States to address some of the more troubling aspects of its law.
She added that the United States and the European Union should invest together in “two clean energy industrial bases on both sides of the Atlantic,” noting that the usual strict public investment rules in the European Union must be relaxed to do so.