Executive Vice-President Dombrovskis appeared before the ECON Committee of the European Parliament to discuss the EU’s response to the US Inflation Reduction Act (IRA) and the importance of EU-US relations across various policy areas.
Dombrovskis highlighted the strong partnership between the EU and the US in terms of trade and investments. Transatlantic trade in goods reached over €1.3 trillion last year, and mutual investments reached a record total of around €5 trillion. The EU and the US are each other’s largest and most crucial trade and investment partners, supporting millions of jobs on both sides of the Atlantic.
Regarding the IRA, Dombrovskis expressed appreciation for the US’s climate ambitions and the act’s contribution to global climate change mitigation. However, he raised concerns about the protectionist measures included in the IRA.
Dombrovskis emphasized that while the IRA acts as a significant stimulus for the US economy, there are subsidies that require local production, content, or employment, which EU companies cannot meet unless they relocate their businesses to the US. This could potentially have a negative impact on EU exports, with certain EU businesses being more affected than others.
Another concern raised by Dombrovskis is the potential for US companies to export products with unfair subsidies, which could have adverse effects in Europe and trigger the use of trade defense instruments to protect the EU’s internal market.
To mitigate these issues and avoid transatlantic zero-sum competition, Dombrovskis stated that the EU has been working hard to find pragmatic solutions. A high-level Task Force was established, resulting in positive outcomes, including a non-discriminatory application of electric vehicle leasing and agreements on critical raw materials and clean energy incentives.
The Critical Raw Materials agreement aims to ensure secure and resilient supply chains between the EU and the US for minerals essential for the green transition. The EU’s mining and chemical companies would be able to offer their products to US battery manufacturers without risking the loss of IRA benefits.
Additionally, the Clean Energy Incentives Dialogue, placed within the Trade and Technology Council (TTC), aims to enhance transparency and coordination between the EU and the US in their respective support programs, particularly in preventing market-distorting subsidization.
Dombrovskis also highlighted the recent TTC meeting, which focused on sustainable trade, trade facilitation, and trade and security issues. The EU aims to ensure that trade policy contributes to the green transition and enhance trade facilitation between the EU and the US, particularly in areas such as conformity assessment and digital initiatives.
In conclusion, Dombrovskis stressed the importance of maintaining a strong EU-US relationship, avoiding protectionism, and finding solutions that reduce the damage caused by the IRA. He emphasized the EU’s internal actions, such as the Green Deal Industrial Plan and the Net-Zero Industry Act, which aim to promote resilient supply chains and increase Europe’s competitiveness in the transition to a net-zero economy.
Dombrovskis expressed the need for continued political support from the European Parliament and its committees in these efforts and looked forward to further exchanges on these matters.
https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_23_3926