The European Commission wants to negotiate with the United States a treatment close to a free trade agreement in order to benefit from subsidies linked to President Biden’s major climate plan, the Inflation Reduction Act (IRA). An EU official visiting the U.S. explained that the IRA provides for some tolerance for partners involved in a free trade agreement, which the EU hopes to sign with the U.S. Discussions on the agreement are expected to take place during the visit of European Commission President Ursula von der Leyen to Washington next week.
U.S. investment in energy transition welcomed by EU
The EU welcomes the investment made by the United States in the energy transition, with an approach “similar to the Green Deal” implemented by the EU. However, the plan is also a source of considerable concern for the Member States, which fear in particular that multinationals will question their investments in Europe and instead make them in the United States and take advantage of the aid provided for under the plan. This is particularly true in sectors such as electric batteries and semiconductors, where Europe wants to become more independent.
EU wants to avoid a subsidy race
However, the agreement envisaged on the European side should not be finalized before the visit, as discussions are progressing slowly on certain points. But the desire is to avoid entering “a subsidy race” on either side of the Atlantic that would be “harmful to all. We would all be spending money inefficiently”. “We have the same objectives in terms of fighting global warming, prosperity or control of certain insufficiently open economies. Let’s avoid stepping on each other’s toes,” insisted this source.
Discussions also planned on the global agreement on sustainable steel and aluminum
The discussions between Ms. von der Leyen and U.S. President Joe Biden are also expected to include the comprehensive agreement on sustainable steel and aluminum, which has been under discussion for over a year. “We have until October to find an agreement (…) but it is not simple because each side of the Atlantic has its own system. We must therefore ensure that the agreement covers both,” said the European official.
In sum, the US-EU discussions on the U.S. grand climate plan and the comprehensive agreement on sustainable steel and aluminum are expected to be at the center of discussions between the President of the European Commission and US President Joe Biden next week.
