In an effort to counter financial aid that the United States has put in place for American manufacturers, France and Germany are urging the European Union to allow them to fast-track subsidies for Europe’s green industries.
The push follows the row over the massive US green support package that envisages big financial incentives and aid in place for American manufacturers, which the EU claims that unfairly discriminates against its firms.
Brussels has already warned of a possible trans-Atlantic trade war with Washington over the $369 billion- worth US Inflation Reduction Act that favors American-made products.
France’s Economy and Finance Minister Bruno Le Maire and Germany’s Economy Minister Robert Habeck demanded in a joint statement for targeted subsidies and tax credits for industry via umbrella state aid programs that wouldn’t require the European Commission’s lengthy checks.
They’re to travel to Washington in early January to discuss the consequences of the US Inflation Reduction Act along with officials from the European Commission, fearing that the policy could incentivize European companies to relocate to the US.
Their demands are the latest pressure from Paris and Berlin against EU subsidy rules they deemed too restrictive, especially considering how hard the companies have been hit by soaring energy costs.
The EC currently requires governments to ask permission before granting most aid to companies and the two ministers have now asked for criteria on what aid could be approved in advance and for general national support programs.
The US subsidies, as the European industry has complained, are the last straw in making EU-made goods less competitive with rivals on the global markets.
They also urged Brussels to negotiate with Washington for European manufacturers to get the same exemptions the US grants to Washington’s free-trade partners Mexico and Canada.
Many of their ideas echo European Commission President Ursula von der Leyen’s proposals. Last week she wrote to EU leaders saying the bloc should aim to achieve the unprecedented transformation from fossil fuels to green power by adjusting its rules on state aid.
