Von der Leyen: EU must adapt its Rules in response to US Subsidies

EU | December 5, 2022, Monday // 10:37|  views

European Commission President Ursula von der Leyen

The European Union will adapt its state aid rules to prevent investment outflows caused by the new US green energy subsidy package, European Commission President Ursula von der Leyen said on Sunday, while proposing cooperation on raw materials in order to oppose China's dominance, Reuters reported.

"Competition is a good thing ... but this competition must respect a level playing field," Von der Leyen said in a speech in the Belgian city of Bruges.

"The (US) Inflation Reduction Act (IRA) should make us think about how we can improve our state aid frameworks and adapt them to a new global environment," she added.

The 27-nation bloc fears the $430 billion IRA and its generous tax breaks could drive business away from the EU and disadvantage European companies, from carmakers to green-tech makers.

The topic is one of several on the agenda for the December 5 US-EU Trade and Technology Council meeting.

Participants include US Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and US Trade Representative Katherine Tai along with European Commission Vice Presidents Valdis Dombrovskis and Margrethe Vestager.

Von der Leyen said the EU must take action to rebalance the playing field where the IRA or other measures create distortions, while warning that a trade war is in no country's interest.

"We have to do our homework here in Europe and at the same time we have to work with the United States to mitigate the disadvantages," she noted.

Green transition

To help European companies in the short term, the EU is working to boost RePowerEU, the bloc's plan to end dependence on Russian fossil fuels by financing the green transition, Von der Leyen said.

"However, we must think beyond ad hoc solutions. The new offensive industrial policy of our competitors needs a structural response," she stressed.

"This means, on the one hand, new and additional funding (for research, innovation and strategic projects) at EU level and... on the other hand, a higher level of policy coordination."

At the same time, Europe needs to cooperate with the United States against the backdrop of China operating with massive car subsidies while controlling critical raw materials, Von der Leyen noted. This could mean agreeing joint EU-US standards for charging electric vehicles, for example.

"If Europe and the United States agree on common standards, we will shape the global standards and not leave it to others," she said.

As for scarce raw materials for clean technologies, "Europe and the US can build an alternative to this (Chinese) monopoly by creating a critical raw materials club," Von der Leyen said.

"The idea behind it is simple: cooperation with partners and allies in terms of sourcing, production and processing, which enables us to overcome this monopoly."


Meanwhile, the presidents of the United States and France, Joe Biden and Emmanuel Macron, have agreed to "fix" the problems caused by the American legislation, which provides for subsidies for goods produced in the United States, Macron himself said, quoted by "Reuters".

The agreement was reached during the French president's official visit to the US last week.

"What we decided with President Biden is exactly to fix this problem. And it is fixable," Macron said in an interview with CBS that aired yesterday.

On Thursday, at a press conference with the French president, Biden said: "There are adjustments that we can make (and) that can essentially make it easier for European countries to participate (in the scheme) or be left on their own."

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Tags: EU, US, von der leyen, trade


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