The US wants to invest mountains of money in climate protection. To the detriment of Europe? Minister Habeck and his French colleague Le Maire are promoting their interests in Washington.
The effort is great, the result difficult to grasp: Federal Economics Minister Robert Habeck (Greens) and his French colleague Bruno Le Maire have not returned from their talks in Washington with concrete commitments to future market access for European companies in the USA. Habeck had previously announced that it would be a working visit in a series of similar meetings. “In this respect, it’s not about signing something once.”
And that’s how it happened. “It is not our intention and it was never our intention to change American law,” Le Maire said in Washington yesterday after he and Habeck held talks with US officials. But you want to create complete transparency, because that is the basis for fair competition. The EU Commission must negotiate concrete concessions. The two ministers only saw each other in a supporting capacity. But what exactly was your visit about?
Legislative package to reduce government deficit
The European unrest was triggered by the American Inflation Reduction Act (IRA), which is much broader than the name suggests. Climate protection measures should lead to a reduction in climate-damaging CO2 emissions in the USA by around 40 percent by 2030 compared to 2005. The cost of certain medicines should go down.
The legislative package is also intended to close tax loopholes. The government assumes that the legislative package can reduce the national deficit by more than $300 billion. This should also curb high inflation.
Habeck wants a Europe-friendly application
The catch from a German and European perspective: Many subsidies and tax credits are linked to the fact that profiting companies use US products or produce them themselves in the USA – which triggers concerns in the EU about competitive disadvantages. Associations warn of a trade dispute and demand better production conditions in Europe. The USA is the most important sales market for the export-oriented German economy. Cars and car parts, machines and pharmaceutical products play a major role here.
Habeck and Le Maire therefore campaigned for a Europe-friendly application of the law. According to their own statements, they have achieved, above all, commitments for more transparency about the extent of state support in the USA. What that’s worth remains to be seen.
Habeck said it was agreed that there was no risk of getting into a subsidy race. “My understanding and my interpretation of the talks is that there is a great willingness to find forms of cooperation without reopening the IRA,” Habeck said. Working together means bringing the two markets together.
Changes are out of the question for Joe Biden
In Europe, there is hope for more favorable application rules for the law that has already been passed, which is currently being worked on in Washington. In the areas of the automotive industry and batteries, this work is practically complete, but not yet in the case of regulations for hydrogen as an energy source and for important raw materials, according to Habeck. “So we still have a few months to come to a solution.” Although the EU Commission is conducting the relevant negotiations, they want to support them.
The package was negotiated in a tough process with concessions, so subsequent changes are out of the question for US President Joe Biden. “I’m being criticized internationally for focusing too much on America. To hell with that,” Biden said in a speech in late January.
US economy in focus
It sounds different with Habeck. “The look we have on each other is one of affection and friendship,” he says. Basically, this IRA with its will to protect the climate is a good thing, from which European companies also benefit. “That is most welcome.” The Americans would do the same as the Europeans, who are already promoting electric cars and renewable energies. But in some places, American companies and locations are preferred, and they want to talk about that in order to “get these cows, these last cows, off the ice too.”
A stumbling block for the Europeans – but also other trading partners such as Japan and South Korea – is the tax break for electric vehicles. The US Treasury Department still has some leeway here when it comes to which vehicles are eligible. That could help the Europeans. However, it is questionable how far the US government can actually go – and wants to. Key members of Congress and the administration itself have made no secret of the fact that the legislative package is intended first and foremost to benefit the US economy.
Hope for EU summit this week
In response to the IRA, but also to Chinese subsidies, EU Commission President Ursula von der Leyen recently presented a new green industrial program. In it, she announced the need to invest hundreds of billions of euros in climate-friendly technologies. To this end, the authority wants to expand and accelerate access to funding and give the EU states more freedom for targeted subsidies. The proposals are to be discussed at the EU summit this week.
Le Maire called von der Leyen’s proposals an “excellent basis”. He emphasized: “Now it is time to decide and to accelerate. This is also one of the conclusions that we should draw from our visit to Washington.”
Source: Stern
