The US and the EU have yet to reach an agreement on trade subsidies

The Executive Vice President of the European Comission and head of Trade, Valdis Dombrovskis, and the Trade representative of USAKatherine Tai, are meeting today with the US Inflation Reduction Act, which provides for multi-billion dollar investments in American-produced green technology, a bone of contention.

On the American side, the meeting scheduled for Tai in Brussels on his way to Davos Forum (Switzerland)where you plan to be tomorrow, will serve to discuss the strong US-EU trade and economic relationship and reaffirm the importance of the transatlantic relationship, as well as the importance of US-Europe cooperation on a number of priorities shared.

For Brussels, one of those priorities is to mitigate the negative collateral effects on the economy of the Twenty-seven caused by the US law on reducing inflation, in force since the beginning of this year.

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To deal with it, Brussels contemplates selectively and temporarily relaxing the rules on State aid to favor subsidies for clean technologies and prevent investments from leaving the European Union for the United States due to the support that this country will provide with its legislation. .

Brussels insists, however, that this must be accompanied by “credible and ambitious” financing tools at the European level so that all EU countries, including those with less fiscal muscle, can invest in green technologies, according to what it said last Friday. the president of the Community Executive, Ursula von der Leyen.

Von der Leyen is expected to allude to this issue again this Tuesday in his speech at the Davos Forum.

The American Inflation Reduction Act provides for 369,000 million dollars in subsidies “green” that will be linked to producing in US territory, which in the EU’s opinion implies unfair competition and discrimination for European companies, which could relocate their investments.

“There are intense discussions on how to improve Europe’s competitiveness and speed up the twin transitions (digital and green). We are reviewing our state aid rules to amend and simplify where necessary. And it can be a short-term boost, of course, but we don’t build competitiveness from subsidies”said yesterday the executive vice-president of the European Commission, in charge of Digitization and Competition, Margrethe Vestager.

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State aid can be “a temporary adjustment”but that competitiveness is achieved from “a dynamic, innovative and well-functioning market”, Vestager added during a speech at the ceremony organized in plenary session of the European Parliament to celebrate thirty years of the single community market.

In view of the consultation with the countries to review the rules of state aid under US law, Vestager sent a letter on Friday to the bloc’s finance ministers asking their opinion on possible measures to accelerate the green transition and how to prevent support public fragments the single market.

Source: EFE