Finally, European leaders fear the Inflation Reduction Act will harm European companies. To qualify for tax incentives, clean energy products must typically be manufactured in the United States or, in some cases, neighboring or allied countries. For example, the new climate law requires electric vehicles to be assembled in North America to qualify for subsidies, and that their batteries be produced from an increasing proportion of parts that are mined or processed. in the United States or other countries. free trade partner. The European Union is not one of those partners.
Europeans have the right to express concerns on protectionism. Industrial policy is in vogue again and the Inflation Reduction Act is the latest in a growing trend to boost domestic industries, create jobs and secure supply chains – something that European Green Deal also. China’s own protectionism and the use of its industries for geopolitical influence have led Western governments to favor trade with allies – the so-called friends-protection.
However, Europe’s current energy crisis has nothing to do with new US clean energy subsidies. Furthermore, terms that Europeans find offensive are uncommon; For example, commercial vehicles, such as delivery vans and vans, do not have a domestic manufacturing requirement to receive subsidies. However, U.S. officials should exercise their discretion in put the law into effect and in trade negotiations to lessen the potential harm to Europe and other allies such as South Korea and Japan.
With skillful trade diplomacy, the new climate provisions of the Inflation Mitigation Act will create more opportunities for cooperation with the European Union than pose risks to the transatlantic relationship. Positive. For example, US and EU officials could push for strong climate action on both sides of the Atlantic to implement a recent agreement on climate change. limit steel and aluminum imports, especially from China, that do not meet certain emission standards and work together to create favorable trade terms for countries that meet those standards or apply set a carbon fee for import without.
diplomacy is in process Thursday during the meeting between President Biden and Mr. Macron. The French president spoke of the need to “resynchronize” his country’s economic partnership with the United States to “succeed together”. Mr. Biden said he was “not sorry” about the Inflation Reduction Act but also acknowledged the law had “hiccups” and said: “There’s a lot of things we can work out.”
This is a positive step. Transatlantic cooperation will be needed more than ever to accelerate the transition to clean energy and secure those new supply chains. It is also essential to counter Russian aggression in Ukraine. European leaders should tone down the rhetoric and work with their US counterparts on collaborative approaches to accelerate climate action, strengthen energy security, and help Europe cope with the crisis. energy crisis.
Jason Bordoff (@JasonBordoff) is the founding director of the Center for Global Energy Policy at Columbia University’s School of Public and International Affairs, a former senior director on the staff of the US National Security Council. and a former special assistant to President Barack Obama.
