EU Aims for US Deal to Resolve EV Subsidy Dispute

Lyubov Pronina
·2 min read

(Bloomberg) -- The European Union hopes to resolve in upcoming negotiations a dispute with the US over new subsidies for North American manufacturers, a senior diplomat from the bloc said on Monday.

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The recently passed US Inflation Reduction Act, which provides subsidies to support green technologies in the US, is seen as discriminatory by the EU, South Korea and other trading partners.

An EU-US task force is scheduled to discuss the issue this week, ahead of a December meeting of the US-EU Trade and Technology Council. That council, a consultative forum set up last year, has emerged as a powerful tool for boosting trans-Atlantic cooperation, but the electric-vehicle subsidy issue has served as a notable irritant.

“It has to be worked out,” Stavros Lambrinidis, the EU’s ambassador to the US, said in an interview on Bloomberg Television’s “Balance of Power with David Westin,” referring to the subsidy question. “This is what I hope we will reach in those talks. When both of us do the right thing in the right direction, I have no fear for where we are going.”

While praising the legislation as a “huge positive step forward” to support a transition to sustainable energy in the US, Lambrinidis lamented that the package gives incentives only to companies that are based or are investing in the US. Europe’s incentives, by contrast, aren’t discriminatory, he said.

‘Nondiscrimination’ Call

“There is no way you can transition to electrical vehicles as fast as the US wants to do if you exclude European cars from the equation,” he said. “We give Tesla the same incentives we give our companies. This is the kind of nondiscrimination that can help our economies.”

The co-chairs of the Trade and Technology Council last week discussed topics including the electric vehicle provisions in the Inflation Reduction Act, and the need to continue engagement on the issue. Following the talks with US Trade Representative Katherine Tai, European Commission Executive Vice President Valdis Dombrovskis said that an exemption is an ideal solution for the EU on the US act.

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