December 4, 2022
EU should go to WTO over US subsidies, says lawmaker
The head of the European Parliament's Trade Committee, Bernd Lange, said on Sunday that the bloc should file a complaint with the World Trade Organization (WTO) over the Inflation Reduction Act (IRA), which was passed by the US Congress in August.
"I don't think that much will change in substance, because the law has already been passed," Lange was quoted as saying by Funke media group. The $430 billion (€408 billion) US package aims to tackle climate change, lower the costs of medication for the elderly and reduce energy prices, among other things.
But it also offers massive subsidies and generous tax breaks purchasing US-made products.
Only countries that have signed a free trade deal with the United States, like Canada and Mexico, can benefit from the subsidies. This has triggered concerns in the EU that it may disadvantage European firms — from car companies to makers of green technology.
What is the EU's argument?
EU leaders say that €200 billion out of the total package is tied to provisions for domestic US manufacturing that potentially violate WTO rules. The 27-member bloc says it cannot compete with the US tax breaks, as it is tied by EU state aid. French President Emmanuel Macron, who was in Washington for a state visit this week, described the subsidies as "super aggressive" and warned that they could "divide the West."
Macron and US President Joe Biden, however, pledged to work not to let the subsidies spark an even larger trans-Atlantic trade dispute, even though Democratic lawmakers said they have no plans to make changes to the IRA.