Leaders of the bloc will meet next month to discuss possible responses to what they see as unfair measures
Germany and France have called on the EU to increase support for domestic industry and unleash massive investment to avoid falling behind US companies in light of the US Inflation Reduction Act (IRA), which they say is discriminatory.
On Sunday, German Chancellor Olaf Scholz and French President Emmanuel Macron met in Paris to discuss how the EU should respond to the controversial US program.
The IRA is a $430 billion package passed by Congress in August aimed at fighting climate change, increasing social spending, fighting inflation and lowering energy prices. It offers generous tax breaks for US companies investing in clean energy and significant subsidies for domestic electric vehicles, batteries and renewable energy projects.
The legislation has raised concerns in the EU that “protectionist” actions can be “discriminatory” against European companies. The bloc argues that the law does not comply with international rules and would unfairly entice companies to shift investment to the United States from Europe.
“The first thing is to make sure that we as the EU are not treated worse than immediate neighbors like Canada and Mexico, for example – that cannot be accepted.” Scholz told a joint press conference with Macron in the Elysee Palace. The French president, who previously criticized the subsidy provision in the IRA as “super aggressive” added that the EU has “a real convergence of the answers we give.”
READ MORE: The EU should sue the US – trade chief
The leaders of the European bloc will meet next month to discuss their options. One of them is to file a complaint with the World Trade Organization (WTO). In addition, a support plan is being considered which would likely include more lucrative conditions for Member States to invest in domestic companies. EU funds may also be awarded to struggling companies, Bloomberg reported on Monday.
European Council President Charles Michel has proposed a new bond program to help offset financial inequality between EU member states and would allow cash-strapped nations to invest more in green technology.
Meanwhile, a number of EU states, including Denmark, Finland, Ireland, the Netherlands, Poland and Sweden, have warned that retaliation could trigger a race between countries and cause a fragmentation of the single market. More broadly, the move could split the global economy and push consumer prices higher.
For more stories about economics and finance visit RT’s business section