US-EU talks ‘moved the needle’ on Inflation Reduction Act issues, Vestager says

by Bloomberg Dec 06, 2022

Discussions between the European Union and US this week “have moved the needle in order to get closer to a solution” to issues the bloc has with the American Inflation Reduction Act, said Margrethe Vestager, the EU’s antitrust chief.

“One of the reasons why I have a sense of comfort is that we have solved very difficult things before,” Vestager said, pointing to previous issues over US-EU data flows. “So when you’ve done something difficult once, you tend to think, well, we can do something difficult again.”

Vestager added that the approach of President Joe Biden and of her US counterparts also inspired hope that a solution could be found.

The act — which the EU has said is discriminatory and lures European companies to invest in the US rather than on the continent — risked starting a trade war between the EU and US. Last week, Biden told French President Emmanuel Macron that the US would look at tweaking the legislation.

Secretary of State Antony Blinken added to those comments on Monday at a press conference following the Trade and Technology Council, saying that the US had heard concerns from their “European friends” and were discussing IRA provisions including tax credits for both commercial and electric vehicles, critical raw materials and the supply chain.

Vestager said on Tuesday these discussions were helpful and that EU-US task force will “hammer out the details before the Inflation Reduction Act will come into effect first thing in the new year.”

Europe is looking at creating new industrial plans that would rival the US law. Commission President Ursula von der Leyen said the bloc should re-examine its state-aid rules and look at creating a European fund to invest in green technologies.

Vestager previously stressed these state-aid changes would not change the EU’s rules, and said Tuesday that the EU is looking at a temporary crisis framework to ensure Europe is an attractive place for companies to invest. Vestager also warned against a subsidy race with the US or within the EU.