Europeans angry over Joe Biden’s Inflation Reduction Act threatens a trade controversy

The European Union and the United States are walking precariously near a major transatlantic trade dispute at a time when the two Western giants want to show solidarity in the face of challenges from Russia and China.

EU trade ministers on Friday insisted they would be forced to respond if Washington stuck with all sanctions. provisions of the Inflation Reduction Actbenefits local companies through subsidies and, according to the EU, unfairly discriminates against companies that want to compete for contracts.

“No one wants to participate in a tit-for-tat race or subsidies. But what the US has done is really inconsistent with the principles of free trade and fair competition,” said Irish Trade Minister Leo Varadkar.

Although the allies have stood shoulder to shoulder by imposing strict sanctions on Russia since the February 24 invasion of Ukraine, they cannot cover up their trade differences.

“What we are asking is fairness. We want and expect European companies and exports to be treated in the same way as in the US in the same way that US companies and exports are treated in Europe,” said Vice President of the EU Commission. Valdis Dombrovskis said.

And beyond the European Commission, which negotiates on behalf of the 27 member states on trade issues, concerns are also largely shared in the capitals of the EU states.

“All member states are concerned,” said Czech Trade Minister Jozef Sikela, who chaired the emergency meeting.

The Czech minister said the EU still hoped that the differences could be resolved at the bloc’s December 5 meeting. US and EU special forces establishedwith the possibility that the bloc will be treated like Canada and Mexico and exempt from subsidy conditions.

The trade dispute has been a red line for decades in transatlantic relations, notably disputes over aircraft subsidies and steel exports, and affects everything from processed beef. hormone treatment for alcohol export.

Planned subsidy The Inflation Reduction Act was passed by the US Congress in August, which is particularly irritating to the EU. For example, electric car buyers are eligible for a tax credit of up to $7,500 as long as the vehicle runs on batteries built in North America using minerals mined or recycled on the continent.

The EU believes this measure is a potential transatlantic trade barrier that discriminates against foreign manufacturers. Potential actions the EU could take are complaints before the World Trade Organization, trade sanctions or increased subsidies for its own companies.

Those considerations must weigh with the need to cooperate on the geopolitical stage and the nature of presenting a united front.

Estonian Trade Minister Kristjan Jarvan said: “We see that parts from the East are really trying to divide us. “And of course the economy plays a huge role in that.”

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