The Heads of State and Government of the EU countries have decided to hold an extraordinary summit on 9-10 February 2023 on the European response to the US Inflation Reduction Act (IRA).
“The IRA has an impact (on the European economy), we will have to be very mobilised to guarantee the integrity of the Internal Market”, declared the President of the European Council, Charles Michel, at a press conference on Thursday 15 December at the end of the European Council in Brussels. He stressed the need for “rapid” and “massive” European action. “And we ask that it be on the table at the end of January and at the heart of the February summit”, he added.
In their conclusions, EU leaders call on the European Commission to present proposals by the end of January 2023 to counteract the discriminatory effects of the US law. They urge the institution to come up with a European strategy to strengthen the EU’s competitiveness and productivity by early 2023.
Towards a SURE instrument of European sovereignty?
The President of the European Commission, Ursula von der Leyen, recalled the main lines of her proposals unveiled the day before, insisting on the continuation of talks with Washington, the revision of the rules on State aid, the reinforcement of investments in the short term via REPowerEU and, in the medium term, the creation of a fund for European sovereignty.
Interesting point is that President Michel endorsed the proposals put forward by Commissioners Thierry Breton and Paulo Gentiloni to set up a fund along the lines of the SURE instrument (see EUROPE 13022/11).
According to our information, the timetable for the presentation of the future fund could be brought forward by a few months compared to what Ms von der Leyen announced in the European Parliament this week (see EUROPE 13084/1).
French President Emmanuel Macron said that he hopes to see the fund presented next spring or summer. Perhaps a sign of very moderate enthusiasm on the German side, Chancellor Olaf Scholz cited all the measures under consideration, except that for the fund.
In any case, “on the basis of today’s discussions, the European Commission will continue its work to make concrete proposals”, added President von der Leyen. Belgian Prime Minister Alexander De Croo, for his part, warned that: “We must not move towards a system of massive subsidies”.
In its conclusions, the European Council invites the Eurogroup to monitor economic developments in relation to the US law, always with a view to making, if necessary, the appropriate adjustments to the budgetary policies of the euro area countries.
A consensual subject
At the start of the meeting, leaders were briefed by the Commission on the ongoing discussions between the EU and the US, notably in the framework of the US-EU Task Force on the Inflation Reduction Act (see EUROPE 13051/26). But transatlantic relations were not really discussed among the leaders.
For several months, Europeans have been concerned about the discriminatory nature of this law, which is due to come into force in January (see EUROPE 13012/16, 13077/10).
The EU is requesting an exemption, along with Mexico or Canada, whose products will be eligible for IRA subsidies (see EUROPE 13054/2).
The European Commission, for its part, expects proposals from the US side by January. Mr Scholz reiterated his confidence in a successful conclusion to the diplomatic talks, citing in particular the return from talks held by Macron and US President Joe Biden.
According to several sources, the Americans see a possible room for manoeuvre in the interpretation of the IRA and, in particular, in the definition of US partner countries.
US climate ambition still welcomed
Despite the criticism of the IRA in recent weeks, more and more voices concede that the US law is positive, even “legitimate”, as do the President of the European Council, the President of the Commission and the German Chancellor. All three welcomed the importance of these measures for climate protection.
See the European Council conclusions: https://aeur.eu/f/4pd (Original version in French by Pascal Hansens and Léa Marchal with the editorial staff)