France demands transparency to defuse subsidy fight with the US

French Finance Minister Bruno Le Maire will head to meetings with counterparts in Washington on Tuesday demanding more transparency from President Joe Biden’s administration on green industry subsidies, in order to avoid an escalation of transatlantic trade tensions. 

Le Maire and Robert Habeck, who runs Germany’s economy portfolio, will meet with US officials including Treasury Secretary Janet Yellen as part of the European Union’s response to Biden’s Inflation Reduction Act, which includes roughly $500 billion in new spending and tax breaks over a decade. 

France has been one of the most vocal critics of the landmark legislation, warning it could unfairly rewrite the rules of globalization and lure jobs and investment away from Europe. 

The US has already offered tax credits for Europe-made commercial vehicles, and the two sides are discussing a possible deal on minerals and critical raw materials that would treat EU like a free-trade partner. 

Beyond those exemptions, there is little room for maneuver, which is why Le Maire will push for the US to commit in other areas including transparency on Biden’s industrial policy, officials from France’s finance ministry said, speaking on condition of anonymity. 

More openness on the quantities and beneficiaries of US subsidies would prevent industrial companies from playing the US and EU against each other to pressure governments for the maximum amount of public funding, the officials said. 

They also highlighted that greater clarity on US measures would help the EU tailor its efforts and ensure aligned support for companies on either side of the Atlantic that compete in the same market. 

Busy Schedule

Alongside Yellen, Le Maire and Habeck will meet with US Secretary of Commerce Gina Raimondo, Trade Representative Katherine Tai, and officials from the White House. 

Earlier this week, the EU already unveiled a road map for how it plans to keep its industries competitive as the bloc tries to catch up huge subsidies the US and China offers for domestic green technologies. 

Le Maire has welcomed those proposals, which would boost national support for companies through investment aid and tax credits, while also tapping into common European funds to underwrite important projects.

“Faced with the Inflation Reduction Act, Europe must get into battle order and defend its industry,” Le Maire said on Wednesday. “France is totally determined to protect and develop its productive base.”