Europe needs a “coordinated, united and strong response” to a US act that includes subsidies for American businesses, France’s finance minister said in an interview with four European media outlets.
The US Inflation Reduction Act, signed into law by President Joe Biden over the summer, includes an estimated $369 billion investment in energy security and climate change.
“Some large foreign companies that wanted to set up in Europe are now hesitating between European and American sites,” said finance minister Bruno Le Maire in an interview published by four European newspapers on Monday.
“In some cases, the amount of grants the Biden administration is offering is four to ten times the maximum amount allowed by the European Commission,” the minister added.
The French minister called for a “coordinated, united and strong response from the European Union vis-à-vis our American allies.”
The EU’s trade commissioner has previously said the US state aid may discriminate against EU automotive, renewable, battery and energy-intensive industries.
The bloc’s internal market commissioner Thierry Breton said in an interview with BFM Business on Monday that he agreed with Le Maire about the US law.
Breton said that if the US did not address the problems with the act the EU “will have to go to the WTO (World Trade Organization), and we will then consider retaliatory measures.”
He said the European Commission and the US government had created a high-level task force two weeks ago to discuss the concerns with the act.
Le Maire added that European industry “is already suffering from a lack of competitiveness” due to the difference in energy prices in the US and Europe.
“Massive subsidies under the US Inflation Reduction Act (IRA) and equally heavily subsidised Chinese competition are likely to widen this gap further.”
Europe is facing high inflation with a new record of 10.7% in October. This has been fuelled by energy prices which were 41.9% higher than in the same month last year.
Inflation in the United States meanwhile was at 8.2% in September.
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