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BERLIN/PARIS — Olaf Scholz and Emmanuel Macron find something they agree on after openly disagreeing: against unfair competition from the US and the potential need for Europe to fight back Heightened vigilance.
The chancellor of Germany and the president of France discussed common concerns in a meeting lasting about three and a half hours over a lunch of fish, wine and champagne in Paris on Wednesday.
They agreed that the recent U.S. government subsidy program was a market-distorting move aimed at persuading companies to move production to the United States, according to people familiar with their discussions. And that’s the problem they want the European Union to address.
Consensus on the issue follows what is seen as the EU’s central political alliance between the two largest economies, following public disagreements in recent weeks on key political issues such as energy and defense. collapsed a lot of things.
But while their lunch took place against an awkward backdrop, the two leaders said Washington would continue to push forward with the Inflation Reduction Act, which in its current form provides tax cuts and energy benefits for companies that invest in U.S. land. We agreed that the EU cannot remain idle. Specifically, recently signed US legislation encourages consumers to “buy American” when choosing an electric vehicle. This is a particularly frustrating move for major auto industries such as France and Germany.
Here is a message from Lunch in Paris: If the US does not scale back, the EU will have to fight back. Similar incentive schemes for businesses will be needed to avoid unfair competition and loss of investment. The move would risk plunging trans-Atlantic relations into a new trade war.
Macron was the first to issue a stark warning. He said, “We need a bi-European act like the Americans. We need to book. [our subsidies] The French president specifically mentioned state subsidies for electric cars in an interview with TV channel France 2 on Wednesday night.
Macron also expressed similar concerns about state-subsidized competition with China.[Scholz and I] There was real convergence to move this topic forward and we had very good conversations. ”
Importantly, Berlin, which has traditionally been reluctant when it comes to confronting the United States in a trade dispute, actually supports the French push. We agree that if Berlin and Paris refuse to address key concerns expressed, the EU will need to deploy countermeasures similar to the US scheme.
Scholz doesn’t really like Macron’s “by European act” phrase. Because it reminds me of the “Buy American Act” of nearly 90 years ago. But the prime minister shares Macron’s concerns about unfair competitive advantages, the people said.
Scholz said earlier this month that Europe needs to have “deep” talks with the United States about anti-inflation legislation.
In a blow to Germany’s industrial heartland, chemical giant BASF on Wednesday announced plans to cut operations and jobs in Germany, with the company’s chief executive Martin Brudermüller warning of rising gas prices. was quoted. The reason for this is the tightening of EU regulations.
German Finance Minister Christian Lindner said: “The decision of a successful company like BASF shows the need to improve Germany’s overall attractiveness as a business location. Tweetpledged to take various measures such as “tax cuts on private investment”.
But before bringing up the artillery, Scholz and Macron hope to reach a negotiated settlement with Washington. This should be done through the EU-US Task Force on Inflation Reduction Laws, established Tuesday at a meeting between European Commission President Ursula von der Leyen and US Vice Presidential Advisor Mike Pyle. .
A task force of EU and US officials will meet via videoconference over the weekend to highlight the seriousness of European pressure.
Moreover, the EU trade ministers are scheduled to hold an informal meeting in Prague next Monday to be attended by US Ambassador for Trade Catherine Tai to discuss tensions.
In Brussels, the European Commission is also concerned about the language of President Macron’s “by European act”.
“All measures we take must be in line with World Trade Organization rules,” a European Commission official said, adding that Europe and the United States should resolve their differences through talks. “We must not fall for the kind of retaliatory trade war measures that we have experienced,” he added.under them [former U.S. President Donald] Trump. ”
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