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Europe speaks out against US protectionism



(Brussels) New scent of trade conflict over the Atlantic: several European leaders on Monday denounced the massive subsidies granted by the United States to companies on their soil, waving the threat of legal action at the WTO.

At the origin of the rise in tensions between the two great Western powers, the implementation this summer of the “Inflation Reduction Act”, the largest investment ever decided in the fight against climate change, providing for 370 billion dollars for the construction of wind turbines, solar panels and electric vehicles.

The plan notably provides for a tax credit, up to 7,500 dollars, reserved for the acquisition of an electric vehicle coming out of a North American factory with a battery manufactured locally, thus excluding automobiles produced in the EU.

Europe denounces exceptional aid contrary to the rules of international trade.

The subject is all the more worrying as recession threatens to hit the continent this winter due to the economic consequences of the war in Ukraine.

European firms are already being penalized by soaring energy prices which are hitting them much harder than their American competitors. Thousands of jobs are at stake.

“We expect the European Commission to make strong response proposals to this American policy,” French Finance Minister Bruno Le Maire said in Brussels, before a meeting with his counterparts from the 27 which is to address the subject on Tuesday.

“Avoid a trade war”

“The way forward is to seek dialogue with the American administration in order to find common solutions”, however pleaded the German Christian Lindner.

“I am not sure that the American side has yet fully realized the extent of our concerns,” he said, saying he wanted to “do everything to avoid a trade war”.

Previously, the European Commissioner for the Internal Market, Thierry Breton, had been very firm in an interview with BFM Business. “We will obviously consider retaliatory measures,” he said, waving the possibility of going “before the WTO” to put forward the European arguments if no amicable solution was found.

“For now, we are focusing on the work of the study group and the solutions that can be found within this framework before discussing other options,” said EU Trade Commissioner Valdis Dombrovskis.

In recent weeks, the risk of a “trade war” between the two allied regions has been raised bluntly.

French Economy Minister Bruno Le Maire thus used the expression during a visit to Berlin in October, while calling for it to be avoided, and German Chancellor Olaf Scholz spoke of the risk of a “huge war tariff”.

The trade war is not new in relations between the United States and the European Union, which have had to settle several disputes in recent years. Among them, the face-to-face between the European aeronautics giant Airbus and the American Boeing, again against a backdrop of subsidies, and the imposition of additional customs tariffs by the Trump administration on steel and wood. ‘aluminum.

“The historical irritants are barely appeased when Washington adopts very offensive measures,” commented to AFP Elvire Fabry, expert in trade geopolitics at the European Jacques Delors Institute.

Politically, however, the latter sees more in the measures of the Biden administration “a domestic agenda to protect American interests” than a “declared tariff war” as under the Trump era.

In any case, “there is no time to lose for the Europeans, we are just over three months after their establishment and there have been no encouraging signs of commitment from the States United beyond friendly explanations,” she said.

“The amount of subsidies that the Biden administration offers is four to ten times the maximum amount authorized by the European Commission” in some cases, criticized Bruno Le Maire, in an interview with several European newspapers. According to him, “ten billion investments and thousands of industrial jobs” are at stake.

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