EU Says it Expects IRA Task Force Results Next Week
In a briefing to members of the European Parliament, the European Commission's top trade official, Valdis Dombrovskis, said he expects the negotiations with the U.S. over the discriminatory aspects of the Inflation Reduction Act to partially, but not fully, resolve EU concerns.
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In opening remarks on Dec. 8, Dombrovskis said, "While China might have been the main target, the Inflation Reduction Act will drive jobs from the EU."
The EU's problems go beyond the electric vehicle subsidies, which have dominated press coverage. He said that subsidies for renewables, batteries and recycling "require companies to ensure local content, local assembly and manufacturing requirements."
He said the IRA "dominated our discussions" during the third ministerial-level meeting of the U.S.-EU Trade and Technology Council.
Dombrovskis said he expects some conclusions on what can be changed in the IRA from the U.S.-EU task force next week, but if not then, by the end of the year. He said that Cabinet officials told EU officials that they can address some EU concerns within the implementing regulations, but that they are "unlikely to achieve legislative changes." He gave the example that the raw materials rule of origin for electric vehicle batteries can include the EU because it is in the Raw Materials Partnership.
Once the EU knows how the U.S. is prepared to "tweak" the requirements, as President Joe Biden put it, "then we will have to take stock and see what our options are to address the remaining problems," Dombrovskis said. "We are not taking any options off the table." He noted that some members of parliament said the EU should file a case at the World Trade Organization. Dombrovskis said that is possible, but said that the EU did not want to saber rattle. "Right now we are focusing on negotiating [a] solution," he said.
The questionable efficacy of filing a WTO case was underlined on Dec. 9, when a WTO panel ruled against the U.S. Section 232 tariffs on steel and aluminum. The EU has already settled its case with the U.S., so Norway, Switzerland, Turkey and China were the complainants. The U.S. immediately said it would not drop its tariffs and said, "The United States will not cede decision-making over its essential security to WTO panels" (see 2212090060).