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Dispute between EU and USA: No progress in negotiations on subsidies

Dispute between EU and USA: No progress in negotiations on subsidies

Status: 06.12.2022 06:05 am

There is no quick resolution in sight to the dispute between Brussels and Washington over billions in US subsidies. Neither side indicated any concrete progress after a round of talks in the US state of Maryland.

EU officials have made no progress in talks over the US government’s opposition to rules that would exclude EU electric cars from US tax breaks.

After the third ministerial meeting, called the Trade and Technology Council, the two sides issued a joint statement in which they pledged to work constructively toward a solution. “We recognize the EU’s concerns and underline our commitment to constructively address them,” it said.

Premiums for US electric cars are a thorn in the side of the European Union

EU Trade Commissioner Valdis Dombrovskis has called the new US $430 billion deflationary law discriminatory and insisted changes must be made by the end of the year. Among other things, the law gives car buyers a $7,500 tax credit for new purchases of electric cars made in North America.

The European Union fears that the law will have serious consequences for Europeans. French President Emmanuel Macron recently described Europe as a “job killer”. Responding to this, US President Joe Biden said that the law could still be amended. It is not clear how to do this.

Those around France are said to be hoping for an executive order from the White House. Then there is no need for an amendment of the law by the US Congress – a move the US government also wants to avoid.

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The Act provides large subsidy incentives

The “De-Inflation Act” provides huge subsidy incentives and drastic tax cuts and combines these with regulations for local production. US purchase premiums for electric cars are only available if the vehicle is assembled and manufactured in the US with a specified proportion of the battery.

Critics see the risk that in the future the United States will violate the rules of the World Trade Organization with a law that will bring a lot of investment to their country, and then get nothing for other countries.

Efforts for improvement

US Secretary of State Anthony Blinken said on Monday after six hours of talks that practical and concrete progress had been made on key issues and that he was confident the tax credit issue would be resolved.

Dombrowskis told the crowd that the new US law threatens to undermine progress in trade relations. The “disinflationary law” refers to going back two steps. After the meeting, he said he was “a little hopeful.”