Responses are still pending in the EU on the implementation of the US Inflation Reduction Act (IRA). US Trade Representative Katherine Tai was in Brussels on Tuesday 17 January to discuss the issue with European Commissioner for Trade Valdis Dombrovskis and the future global steel and aluminium deal, which they are expected to reach by October.
The meeting of the two counterparts did not provide an answer on the elements of clarification that the EU has been waiting for in recent weeks (see EUROPE 13091/11).
“The EU remains committed to finding further solutions, but we need to make further progress in negotiations”, he said, before pointing to discriminatory US subsidies, which he said were “problematic”.
Speaking to a handful of journalists, including EUROPE, Mrs Tai reiterated that the US was ready to address the EU’s concerns, without revealing details of the ongoing work of the EU-Washington IRA task force. The issues raised by the EU are “complicated and important”, she stressed. She insisted on the need for both parties “to act in a way that is complementary”.
She did not elaborate on the possibility of her country treating the EU as a “trading partner” in the sense of the IRA so that it could benefit from tax credits on batteries. Instead, she reiterated her vision that trading partners should be able to “use trade policy” but also “create complementary industrial policies”.
The President of the European Commission, Ursula von der Leyen, has further detailed her ideas for a ‘Green Deal Industrial Plan’, including a new ‘Net-Zero Industry Act’ (see other news).
Some worry about a future subsidy race, such as the Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala. Asked whether she thought this race was on, she said she was still observing at the moment. “We are watching, hoping it’s not really where we are. It is important to give incentives, if it’s a race, emerging markets and developing countries will not be able to compete. I’m hoping what we’re seeing will be a balanced and nuanced approach to decarbonising”, she said.
However, there is no question of a subsidy race, let alone a trade war, for Katherine Tai. “You didn’t hear that language from me, and I don’t think I hear that from Commission President Ursula von der Leyen or Commissioner Valdis Dombrovskis either”, she said shortly before her Commission meeting. (Original version in French by Léa Marchal)