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US, EU ministers agree on need for ‘full transparency’ in green subsidies

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The German and French economy ministers, Robert Habeck (L) and Bruno Le Maire started meetings with US officials Tuesday./AFP
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Feb 08, 2023 - 08:58 AM

WASHINGTON — US officials and the French and German economy ministers have agreed on the need for “full transparency” on green subsidies, following high-stakes talks in Washington over President Joe Biden’s ambitious climate action plan.

The aim of the visit by French economy minister Bruno Le Maire and his German counterpart Robert Habeck was to discuss the impact of the Inflation Reduction Act (IRA) on European industry.

While the United States is keen to reduce dependence on Chinese imports, the EU is concerned about collateral damage if companies are enticed by US subsidies to relocate outside the bloc.

Brussels is pushing the United States to make exemptions under the IRA for European companies, but a joint task force set up to address the EU’s concerns has yielded few results.

Le Maire told reporters at a joint press briefing that the talks on Tuesday were “concrete and constructive.”

“We agreed on the necessity of full transparency on the level of subsidies and tax credits,” he said.

US officials and the European ministers also agreed on the need for “constant communication at the ministerial level, especially on strategic investments,” he said.

And they found that the implementation of the IRA “should include as many EU components as possible,” Le Maire said, citing the examples of electric vehicles, batteries and critical minerals.

Habeck added that it is important the partnership between the United States and Europe did not become a “race to subsidies.”

He added that both parties will convene a technical group under the umbrella of an existing task force.

For now, negotiations are proceeding under the European Commission’s leadership.

“It’s a sign that the two biggest economies in Europe — Germany and France — are standing together in this,” Habeck earlier told reporters in Washington.

The visits come after French President Emmanuel Macron’s trip to Washington in December, during which Biden said the IRA was never intended to disadvantage US allies.

Willingness to cooperate 

The European ministers were expected to stress the need to define fair competition along the lines of reciprocity, transparency and cooperation.

On Tuesday, Le Maire and Habeck met top White House economic policy advisor Brian Deese, and held talks with Commerce Secretary Gina Raimondo and Treasury Secretary Janet Yellen.

Asked about the ministers’ meeting with Yellen, Habeck said “there’s a huge willingness to find, without opening the IRA, forms of cooperation.”

Le Maire added that while Europe was calling for fair competition, “it has never been our intention to change the American law.”

A Treasury Department statement said Yellen discussed the implementation of the IRA and the EU’s Green Deal Industrial Plan, “stressing the need to stimulate innovation and technology development” on both sides of the Atlantic.

Under the IRA, $370 billion will go toward cutting greenhouse gas emissions.

The act involves tax cuts for companies that invest in clean energy, along with subsidies for electric vehicles, batteries and renewable energy projects — if they are manufactured in the United States.

Le Maire has previously called the IRA “a game changer,” noting that it offers competitive advantages which, coupled with low energy prices in the United States, poses a risk to European industries.

To head off the threat, the EU last week unveiled proposals such as a relaxation of state aid rules to level the playing field.

Following the Washington visit, European leaders will hold a summit aimed at crafting a response to the US measures.

On Tuesday, Le Maire added the US and EU share the same strategic objectives of becoming more independent by creating new supply chains on hydrogen, chips, solar panels, batteries and electric vehicles among other items.

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