EU and US will continue to discuss US anti-inflation law in trade forum

By: MRT Desk

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EU and US will continue to discuss US anti-inflation law in trade forum

The European Union (EU) and the United States will continue to address European concerns about the damage the U.S. Inflation Reduction Act may cause to their green energy and automotive industry tomorrow at a new edition of the Trade and Technology Council (CTT) in Maryland, USA.

The third ministerial meeting of this forum, set up for the two sides to coordinate their approaches to key trade and technology issues, will bring together at the University of Maryland European Commission Executive Vice-Presidents Margrethe Vestager and Valdis Dombrovskis, as well as US Trade Representative Katherine Tai; Secretary of State Antony Blinken and Commerce Secretary Gina Raimondo.

According to the agenda, Dombrovskis and Tai will begin the sessions with a trade and labour dialogue with representatives of workers and companies, followed by a debate on geopolitical challenges, the digital economy and priorities for 2023, to end the day with an event with the academic leadership, industry associations and civil society.

But among the meetings will highlight a working lunch dedicated to sustainable trade and supply chains and the US Inflation Reduction Act, which Brussels has considered protectionist and harmful to European industry.

Last Thursday, on the occasion of the visit to the White House of French President Emmanuel Macron, US President Joe Biden pledged to modify that law so that it does not harm companies in the green sector in Europe.

At a press conference at the end of their meeting, the two leaders announced that they had reached an agreement to introduce a series of technical changes to that legislation, although they did not specify what they would be.

Biden acknowledged “technical flaws” in the law, which is expected to take effect in January and provides for the largest investment in green technology in the history of the country in order to reduce its emissions by 40% by 2030.

The Inflation Reduction Act will also offer, starting in 2023, tax incentives to companies that use components made in North America for products that favor the transition to green energy, such as electric vehicles.

From the EU, several countries have considered that as the law is raised their industry may be negatively affected and believe that it can violate the rules of the World Trade Organization.

The EU and the US have already launched a working group dedicated to specifically addressing these concerns, which will be acknowledged by both sides during the TTC ministerial meeting, which is expected to help resolve some issues that the group alone could not address.

The EU has argued that a law such as the one to reduce inflation will weaken Europe, which is also not in the interests of the US in view of its important trade relations, and has also stressed that the aid it grants to its industry is not discriminatory.

One of the possible solutions he proposes is for Washington to grant exemptions to European companies and products, as contemplated for Canada and Mexico within the framework of this law.

During the meeting of the TTC itself, the European Commission hopes to promote with the United States a new initiative of “Transatlantic Sustainable Trade” to support precisely the green transition and avoid new trade disputes in sectors such as batteries or renewable energies, as recently advanced Dombrovskis.

Taking into account the current geopolitical context, marked by the Russian war in Ukraine, the two sides want to strengthen alliances in these sectors.

In total, ten working groups will meet covering topics such as artificial intelligence, semiconductors, export control or global trade challenges, and progress is expected in areas that touch the fields of technology or digital.

Uno de los asuntos que abordarán son los riesgos de seguridad a los que se enfrentan infraestructuras como los cables de comunicaciones submarinos que unen los dos continentes a través del Atlántico, y las posibilidades de abrir nuevas rutas para ellos a través del Ártico, lo que permitiría mejor conectividad también con un socio como Japón.

Otros puntos que tratarán es la cooperación para eliminar barreras a la investigación y desarrollo de la computación cuántica, así como la colaboración por lo que respecta a la escasez en la cadena de suministro de semiconductores, de manera que las dos partes puedan alertarse y coordinarse cuando sea posible en caso de trastornos en el mercado.

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