EU wants more benefits for automakers

European officials are still seeking additional concessions from the United States to ensure European electric car manufacturers do not leave the Union amid historic state subsidies.

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The European Union is still not entirely satisfied with recent concessions from Washington on its historic series of green energy subsidies, asking the United States to add more benefits to European car manufacturers.

The EU and the US have been at odds for a few months over the Washington Inflation Reduction Act – sweeping legislation, approved by US lawmakers in August, that includes more than $300 billion in spending on climate and energy policies.

European members have publicly expressed their concerns about the climate bill, since it provides unprecedented tax credits to those who buy electric vehicles made in North America. This could challenge European companies, such as Volkswagen or battery maker Northvolt, who want to sell into the American market. Those companies may also be less willing to invest in Europe if revenues suffer, which could affect the local labor market.

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A European official, who did not want to be named because of the sensitive nature of the negotiations, told a group of journalists last week that there is “no weakening of the ‘America first’ policy,” but since the legislation still exists. in conclusion, “there is still an opportunity to speak.”

American officials, including President Joe Biden, have been accused of protectionism. Speaking alongside his French counterpart in December, Biden said: “We can work out some of the differences, I’m confident.”

Back in October, US Treasury Secretary Janet Yellen admitted that major changes to the legislation were unlikely.

This scheme is still a matter of concern for the EU, as it contains discriminatory provisions.

There have been a number of discussions between American and European officials in recent months and these are unlikely to end soon. A special task force between the two is due to meet again next week.

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In addition, the French and German delegations are to travel to the United States together next month to seek more clarity on how the upcoming subsidies will work.

Not enough?

The US Treasury Department issued guidance in late December that would allow EU companies to benefit from certain credits without having to change their business models. However, further guidance on how the legislation will be implemented remains unresolved.

“A new guidance issued by the US today reaffirms that EU companies can take advantage of the Commercial Vehicle Credit scheme under the US Deflation Act. The EU welcomes this guidance,” said the European Commission, the executive arm of the EU, in a statement on 29 December.

However, in the same statement, he said: “The EU continues to seek similar, non-discriminatory treatment for EU clean vehicle producers under the Clean Vehicle Credits Act of the Inflation Reduction Act. This scheme remains a matter of concern for the EU, as it stands. discriminatory provisions.”

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We are concerned about the consequences of the Anti-Inflation Act: Christian Lindner

Internal observation

The US’s move to continue with such a high level of subsidies has prompted EU nations to take a closer look at how they support businesses.

European Commission President Ursula von der Leyen has said that her team will be amending state aid rules in the coming months so that governments have more freedom to support companies amid the planned green energy transition.

In addition, von der Leyen suggested that the EU should take advantage of the markets and use those funds to raise the level of financial support — an idea that was criticized by Germany and the Netherlands.

“Reforming the bloc’s strict state aid regime will not be easy. Nor will there be debates about whether such subsidy reform should be accompanied by an EU fund, financed by additional borrowing, to balance to keep the Union in the bloc’s single market,” analysts at the Eurasia advisory group said in a note last week.

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