Recently, the EU said that because the US government's "Inflation Reduction Act" undermines the level playing field between the United States and Europe, the EU has set up a special working group and issued a written warning to the US side that it will consider taking retaliatory measures. The analysis believes that under the influence of the Russia-Ukraine crisis, the United States announced a series of stimulus measures, including the Inflation Reduction Act, in an attempt to strengthen its own energy price stability, reliable corporate policies, and green transformation support, which is tantamount to "adding fuel to the fire" of the European industrial and manufacturing crisis.
Criticize the United States for ignoring the concerns of its allies
According to Agence France-Presse, on November 7, local time, EU finance ministers held a meeting in Brussels. Treasury ministers say the U.S. ignores EU concerns about its Inflation Reduction Act, making it possible for the EU to retaliate accordingly.
At the meeting, the finance ministers of France and Germany slammed the US government's policy of vigorously subsidizing the local electric vehicle industry. French Economy and Finance Minister Bruno Le Maire said the U.S. Inflation Reduction Act could "jeopardize the level playing field between European and American businesses" and is raising "grave concerns for the French government." He argued that Europe should respond "coordinated, unified and strongly" to the US legislative act.
German Finance Minister Christian Lindner warned that the United States is completely unaware of the EU's concerns, and the US government must know that this bill will have serious consequences for the market, and the two sides should try to avoid a "-for-tat" or even a trade war.
Earlier, when French President Macron and German Chancellor Scholz held talks in Paris on October 26, local time, they were worried about the "Inflation Reduction Act" introduced by the United States in August this year. Scholz issued a stern warning that the US approach could trigger "a huge tariff war." At the same time, Macron also said that the bill "implements a protectionist policy" and may consider trade retaliation against the United States.
Late last month, an informal meeting of EU trade ministers was held in the Czech Republic. On the same day, European Commission Executive Vice President Dombrovskis and Czech Minister of Industry and Trade Sikra all expressed concern about the US Inflation Reduction Act. The EU said that if the United States continues to promote this bill, then the EU will not sit idly by and will consider subsidizing European companies through similar incentive schemes in the future.
Thierry Breton, the European Commission's commissioner for the internal market, said the U.S. was acting contrary to the principles of the World Trade Organization and that if the U.S. did not take into account the ideas of its European partners, the EU would take "retaliatory measures" and take the dispute to the WTO for resolution.
European manufacturing is facing difficulties
Since the outbreak of the Russian-Ukrainian conflict, Europe's energy supply has been tight and prices have continued to soar, and some economists have warned that the sharp fluctuations in European energy prices and tight supply chains may lead to the beginning of Europe's "deindustrialization". According to US media reports, attracted by relatively stable energy prices and government support in the United States, European companies are moving production to the United States, which has caused strong dissatisfaction in the European Union.
According to reports, Germany's BMW announced on October 19 that it will invest 1.7 billion US dollars to produce electric vehicles in the United States; German chemical giant BASF also announced on October 26 that it plans to reduce its jobs and business activities in Germany in light of Europe's high natural gas prices and stricter regulations.
At the same time, the US government has also issued a series of measures to stimulate the development of manufacturing and green energy industries. Many executives say that the momentum of industrial competition between the United States and Europe is tilting in favor of the United States, and that safe and stable energy supplies are especially true for companies that invest in manufacturing projects for energy-intensive products such as chemicals and batteries.
In addition, in the windfall business of energy, Europe also has a lot of dissatisfaction with the United States. Recently, European Commission officials said that the current price of EU imports of US liquefied natural gas is four times the domestic price of the United States, which is "abnormal."
Due to the gas crisis in Europe and soaring natural gas prices, a large amount of natural gas from the United States is flowing to Europe. Some EU member states complain that after the EU and the United States sanctioned Russia, Russia's natural gas supplies to Europe were greatly reduced, resulting in an energy shortage crisis in Europe, and the United States took the opportunity to sell American-made liquefied natural gas to Europe at a high price.
According to statistics, in the second and third quarters of this year, the total net profit of listed oil and gas companies operating in the United States reached 200.24 billion US dollars (about 1.45 trillion yuan), which was the most profitable six months in the record of the US oil and gas industry. Among them, US LNG operators are expected to earn $59 billion this year, more than double the year-on-year.
In response, EU leaders said that they will discuss the issue of high-priced natural gas in the near future, and plan to adjust the joint gas purchase procedure by the end of November.
Or trigger a new round of trade war
The EU's energy crisis has intensified, but the United States has raised the price of energy exports to Europe, which has made France and other countries quite dissatisfied. In addition, as a downstream industry of energy, many European industrial enterprises have reduced production and stopped production, while the United States has used its energy price advantages and government subsidies at this time to attract European industrial enterprises to invest in the United States, which makes the EU more annoyed. Therefore, the Inflation Reduction Act may bring new variables to the US-EU trade relationship.
Experts point out that if the EU takes retaliatory measures, it is likely to lead to a new round of transatlantic trade wars. To that end, U.S. and European officials are preparing to hold a task force meeting in the near future to address Europe's grievances with the Inflation Reduction Act. However, although the EU has set up a special group with the United States for many days of negotiations, the two sides have not reached a consensus on the contradictions caused by this bill.
The US Inflation Reduction Act officially took effect on August 17 this year, including about 430 billion US dollars (about 3.1 trillion yuan) in the next 10 years to combat climate change, develop clean energy and strengthen medical security, some provisions involve the US government to provide high subsidies for the local electric vehicle industry, and exclude imported electric vehicles from the subsidy list.
In fact, due to the unoptimistic economic situation in many countries, the Inflation Reduction Act of the United States has caused a lot of dissatisfaction internationally. In addition to Europe, Japan and South Korea, which have invested heavily in electric vehicle batteries in the United States, have reacted particularly strongly, warning about the US Inflation Reduction Act.
The Japanese government warned on November 5 that the electric vehicle tax incentives in the US Inflation Reduction Act could eventually discourage Japanese companies from investing further in the United States and affect the US employment environment. At the same time, Japanese electric vehicle companies are currently mired in inflation, and after the implementation of the Inflation Reduction Act, the cost of manufacturing and exporting electric vehicles will rise, and companies will face a double whammy. To this end, the Japanese cabinet will introduce a large-scale economic stimulus package to ease the impact of inflation on individuals and companies.
International public opinion believes that the United States needs to find ways to accommodate the concerns of the EU and other countries at the level of specific rules in order to truly avoid a huge trade war. (Wang Wei, trainee reporter of Rule of Law Daily, Wu Qiong, reporter of this newspaper)
Source: Rule of Law Daily