The last EU summit of the year is overshadowed by a transatlantic trade conflict. American subsidies for green goods are worrying Europeans, who are already bearing the higher costs of the Ukraine war.
German Chancellor Olaf Scholz on Thursday at the last EU summit of the year in Brussels.
To get in the mood for the last EU summit of the year, Charles Michel gave a calendar verse. “Unity is the key,” wrote the Council President in his Invitation to the 27 Heads of State and Government. A week before the holidays, the Belgian served up his list of outstanding issues: from financial aid for Ukraine and the sanctions against Russia to the energy crisis, defense policy and the transatlantic relationship to the Western Balkans question, the “leaders” should have as many points of contention as get out of the way as possible.
endangered harmony
Why Michel had not scheduled two summit days as usual remained his secret. After all, the biggest conflict within the community was already cleared from the table on Tuesday after Viktor Orban gave up his opposition to the aid package for Ukraine and the minimum tax for large corporations – the feared showdown with Hungary did not materialize. To this end, Austria put migration policy on the agenda at short notice and called for the construction of new border fences in Bulgaria and Romania. Harmony, as Michel had it in mind, was out of the question.
But at least there was one issue on Thursday that nobody in the 27 wanted to risk a new trade war with the USA. Michel had titled this item on the program “Discussion on Transatlantic Relations”, which almost sounded euphemistic. In fact, a huge investment plan by the Biden administration – the so-called Inflation Reduction Act (IRA) – is causing enormous headaches for EU countries.
With the plan, the Americans are pumping a total of 370 billion dollars into the domestic economy to promote climate-friendly goods. It’s about subsidies for electric cars, batteries and renewable energy projects that are intended to promote the green transformation of the American economy, but must be “made in the USA”. The investment package is scheduled to come into force in January.
After that, it should be significantly cheaper for European companies to produce in America. In Brussels, people fear an exodus of their own companies or at least considerable economic damage. Another problem is that production in the Old World is already much more expensive than in the USA due to high energy prices. “There is a risk that the IRA will lead to unfair competition,” said Commission President Ursula von der Leyen in the run-up to the EU summit.
But how to react to that? With a lawsuit before the World Trade Organization, with the imposition of punitive tariffs or with your own debt-financed programs for the domestic economy? Von der Leyen had suggested the third variant to the heads of state and government in a letter: With a “sovereignty fund” based on the model of the Corona development fund, the EU should subsidize investments in green technologies. Rules for awarding state aid should also be relaxed, in order to simplify the use of renewable energies, for example.
Quarrel at the wrong time
The head of the Commission received great encouragement from French President Emmanuel Macron, who had called for a “quick and strong” reaction from the EU at the summit. You have to provide fresh money in the form of guarantees, loans or subsidies, said Macron. It cannot be that EU aid for the expansion of green hydrogen technology, for example, “is three to four times lower than what the Americans are putting on the table”.
Without welcoming or rejecting the fund, the EU states agreed on a general formula on Thursday: by the beginning of next year, the Commission is to make proposals on how European competitiveness can be improved. In Brussels, people have not yet given up hope of reaching an understanding with the Americans. A new trade dispute is the last thing the western partners need at the moment.
The Brussels correspondent Daniel Steinvorth Twitter follow.