Status: 11/07/2022 5:46 p.m
The US government wants to fight inflation with billions in subsidies. Federal Finance Minister Lindner warns of distortion of competition and a trade dispute. A working group should now settle the matter.
In view of an anti-inflation program with billions in subsidies and tax breaks in the USA, Federal Finance Minister Christian Lindner has warned of serious repercussions for Europe. “We have to make sure that there is no trade conflict,” said the head of the FDP in Brussels before consultations with the euro countries. “It would only produce losers.”
The federal government is concerned that European companies and industries could be negatively affected. The right way is now to seek talks with the US government. The EU and the US should “not fall into the logic of ‘like you do me, like me,’ right now,” warned Lindner. To resolve the disagreements, the EU and the US have set up a working group. Despite this, Lindner said the United States has not yet realized “the magnitude of our concerns about the consequences.”
Production sites in Germany apparently endangered
US President Joe Biden signed the Anti-Inflation Act into law in August. His Democrats hoped to score points with the package before the midterm elections. Among other things, tax credits are planned for companies that produce in the USA. For example, a $7,500 bonus is provided for every US citizen who purchases a US-made electric vehicle with a US-made battery.
The electric car manufacturer Tesla then announced that it would reconsider its plans to build a battery factory in Grünheide, Brandenburg. The company Northvolt had also questioned the construction of a battery factory worth billions in Schleswig-Holstein and referred to the US subsidy program.
EU Commissioner Breton threatens to go to WTO
The EU Commission finds the “Inflation Reduction Act” discriminatory. Mexico and Canada are exempt from the regulations. EU Internal Market Commissioner Thierry Breton threatened the US with going before the World Trade Organization (WTO). He told the French radio station BFM Business that the US requirements threatened free world trade.
Breton warned that if Washington doesn’t respond to Brussels’ concerns, the EU could “go before the WTO.” Member countries can effectively sue other partners of the WTO agreement. If the appellate body comes to the conclusion that the complaint was justified, countermeasures in the form of punitive tariffs can be imposed.
The EU Commission had already criticized at the end of October that the US law against high inflation threatened a number of EU industries – such as manufacturers of cars, batteries and green energy companies.
France accuses the US of a “subsidy race”.
France’s Economics Minister Bruno Le Maire called for a “strong response” from the EU Commission in Brussels. He accuses the US of fomenting a “subsidy race,” as he said in an interview with the “Handelsblatt” and other European newspapers.
According to EU Trade Commissioner Valdis Dombrovskis, the first concrete results of the transatlantic working group that has now been set up could be seen on December 5th at the meeting of the joint Trade and Technology Council.