Ahen Robert Habeck poses in front of the cameras on Monday afternoon American time in Lafayette Square in central Washington, his words could hardly be friendlier. “The transatlantic partnership has proven its worth,” praised the Federal Minister of Economics and Vice-Chancellor of the Green Party. The American government’s “Inflation Reduction Act”, or IRA for short, is “great” and “very welcome”. “I don’t think the USA wanted to harm Europe,” Habeck continues, with the White House behind him. The Americans are concerned with economic security. “It’s exactly the same approach that I have.”
A few months ago it sounded a little different. Last summer, Joe Biden’s government offered $370 billion in subsidies for the development and expansion of climate-friendly technologies. At first, the Europeans were delighted that the USA now also wants to promote climate protection. But then it dawned on them what was in the offing: a subsidy race for green factories. At the time, there was talk of violations by the Americans against the rules of the World Trade Organization (WTO) and that Europe had to give a “robust answer” to this.
“Passages in the IRA that are problematic”
The answer is now available, EU Commission President Ursula von der Leyen presented it last week. In a nutshell, it reads: The subsidies and tax breaks that companies receive in the United States should also be available in the EU – just as quickly and easily. At the same time, Europeans want their companies in the United States to have better access to the IRA. “There are some passages in the IRA that are problematic, which provide for a unilateral preference for US companies or production sites there,” Habeck said in front of the White House. “We will have to talk about that.” The atmosphere, however, is characterized by “closeness and friendship”.
He is not alone in holding talks with the economics and finance ministers this Tuesday. His French counterpart, Bruno Le Maire, is also coming to Washington. According to Habeck, Germany and France do not always agree, but they are pursuing the same goal. He emphasizes that the talks are closely coordinated with the EU Commission.
Criticism of the IRA comes primarily from German automakers who fear for their sales figures. There should be a tax credit of 7,500 dollars for the purchase of an electric car, but only if the companies produce locally (which many German manufacturers do) and the preliminary products and raw materials also come largely from the United States (which is becoming much more difficult).
Deliveries from Canada or Mexico are permitted, with the USA having a free trade agreement with these countries. Corresponding negotiations with the EU have failed, as is well known, in which Habeck’s Greens played a not inconsiderable part. In a way, the trip is also coming to terms with the past.