EU must engage with US to prevent severe competitive disadvantage

  • Lusa
  • 16 January 2023

At a summit in Brussels on 15 December, European leaders committed to a "rapid" and "strong" response to the plan against inflation and the energy crisis promulgated last summer by US president.

Portugal’s finance minister said on Monday in Brussels that there is a consensus among European countries to talk to Washington to prevent a “situation of severe competitive disadvantage” resulting from the US subsidy plan.

Speaking on the eve of a meeting of eurozone finance ministers (Eurogroup) – to be followed on Tuesday by a Council of European Union finance ministers (Ecofin) – Fernando Medina said that one of the issues that would be discussed over the two days of work “is the European response to the challenges posed by the United States’ programme to reduce inflation, particularly at the level of industrial policies and the creation of conditions for healthy competition between the two sides of the Atlantic”.

“The effort the Americans are making to speed up their energy transition is important in terms of their industries and their automotive sector. The signal that the American administration is giving in this regard is very important,” he began by observing.

“But it is equally important that this effort and this advance that our American partners are making does not translate into a situation of severe competitive disadvantage for European industrial sectors that may be adversely affected by the support that the American administration is giving,” added the finance minister.

Medina then revealed that “there is a line of consensus among the various countries, which is to treat this new American programme as a challenge, but as a challenge that must be faced in dialogue with the United States and also in the use of the EU’s own capacities to level the playing field between the two blocks, both in terms of state support mechanisms and also in terms of the debate about mobilising the Union’s own resources to support significant projects”.

The minister concluded by stating that “there is a wide range of instruments and lines of discussion” that the member states will have at the meetings of the Eurogroup and Ecofin”, affirming his conviction that “naturally they will move forward” and it will be possible “to reach a successful conclusion on both sides of the Atlantic, that is, the ability to accelerate the energy transition towards a more decarbonised economy from the point of view of emissions neutrality, which is what we want to achieve as soon as possible”.

The US inflation reduction act (IRA), a vast investment plan, to the tune of 430 billion dollars, including 370 billion dollars for the development of green technologies, which came into force in August 2022, aims to reduce costs for Americans, covering, for example, investments in the energy sector and subsidies for electric vehicles, batteries and renewable energy projects.

At a summit in Brussels on 15 December, European leaders committed to a “rapid” and “strong” response to the plan against inflation and the energy crisis promulgated last summer by US president Joe Biden, and charged the European Commission with working on solutions, to be discussed at a European Council meeting scheduled for 9-10 February in Brussels.