While the US has been able to communicate its flexibility on one part of the Inflation Reduction Act (IRA) that will benefit European producers (see EUROPE 13091/11), Europeans are concerned about other elements of the Act and the potential relocation of companies to take advantage of US support. These concerns are being felt in all three EU institutions in recent weeks, as the European Commission is due to submit proposals to support the industry.
A second set of guidance on the implementation of the IRA is expected to be issued by Washington in March. At stake for the EU, in particular, is its qualification as a trading partner of the United States so that EU producers can benefit from aid for the manufacture of batteries for electric vehicles.
The idea of a trip to Washington for the German and French economy ministers and EU Trade Commissioner Valdis Dombrovskis had been raised, but according to our information, the latter is not expected to join the trip and has no plans to travel to the US in the near future.
Measures to boost competitiveness seen as increasingly urgent
The Franco-German couple therefore continues to take the lead and call for a strong response to protect European industry. The EU Member States’ representatives from both countries reminded the Commission of this at a meeting (Coreper) on 11 January.
In addition, in early January, France circulated a document detailing a “Made in Europe” strategy in which it makes proposals to modernise and simplify the rules on State aid, adapt the European legislative arsenal to support transition, present financing tools for industrial policy and fully mobilise trade policy.
For its part, the European Commission is currently working on a “four-point plan” incorporating some of these ideas, as outlined by Commission President Ursula von der Leyen in the European Parliament in December. It is also about adjusting the rules on State aid, strengthening public investment at European level for the transition, working with Washington to find solutions on the IRA and accelerating the transition to green energy. Ms von der Leyen reported on this work at a press conference in Kiruna, Sweden, on 13 January.
“We want to reassure business in Europe about our determination to preserve and enhance the economic attractiveness of Europe”, she said. She recalled that her Commission would also present a Raw Materials Act in March, to reduce the EU’s dependence in this area (see EUROPE 13021/5).
She also spoke of the “credible and ambitious” funding tools to support the industry that the Commission envisages. Alongside Ms von der Leyen, Swedish Prime Minister Ulf Kristersson stressed the need to work instead “on ways to strengthen competitiveness and attract more companies on the basis of European capacity and not long-term subsidies”. Also asked about this point, Ms von der Leyen wanted to remind the audience that the EU did not want to “compete on subsidies, but on quality”.
She is expected to present her proposals to EU leaders on 9 February, when they meet in Brussels to discuss the EU’s competitiveness in the transition (see EUROPE 13085/2).
The Economic Affairs Ministers, who are already meeting in Brussels on 17 January, are also expected to discuss this issue (see other news).
MEPs will have the opportunity as well to address the issue in a debate with the European Commission on 18 January in Strasbourg. They then plan to adopt a resolution on 1 February, ahead of the European Council.
In the European Parliament too, more and more voices are being raised for a quick and effective reaction. And this goes beyond even a potential sovereign wealth fund for transition, according to Stéphanie Yon-Courtin (Renew Europe, French), who also calls for more favourable treatment of European actors in public procurement and EU funding. “Billions of euros are put into European funds, such as the Chips Act, etc., and too few conditions are put on them”, she deplored. She added that the IRA had finally made people aware of the need to “be less naive”. (Original version in French by Léa Marchal and Camille-Cerise Gessant)