Bernd Lange, the chairman of the trade committee of the European Parliament, told the Berliner Morgenpost newspaper on Saturday that the EU should submit a complaint with the World Trade Organization (WTO) against the contentious US Inflation Reduction Act (IRA).
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“My assumption is that the negotiations between the EU and the US will not be able to help agree even on small changes in the implementation of the IRA. The basic structure of the IRA will remain in place. In this regard, I think it is necessary for the EU to quickly file a complaint with the WTO in the coming months,” the lawmaker said ahead of a meeting of the EU-US Trade and Technology Council on Monday, at which the IRA package is expected to be discussed. He added that the lawsuit would help clarify “that the US’s actions are clearly not compatible with WTO regulations.”
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A $430 billion social and environmental programme known as the IRA was approved by the US Congress in August. The programme intends to combat climate change, as well as inflation and lower energy costs. It provides substantial subsidies for domestic electric vehicles, batteries, and renewable energy projects as well as large tax cuts for US businesses who engage in clean energy. With many warning that the “protectionist” legislation may be “discriminatory” toward European companies, the plan has raised worries in the EU.
The IRA’s subsidies clause has been criticised as being “extremely aggressive” by French President Emmanuel Macron, and German Economy Minister Robert Habeck has asked for a “strong” response to the bill from Brussels. The legislation, according to EU Internal Market Commissioner Thierry Breton, would result in a “competitive imbalance” between the EU and other importers of US goods, he told the Journal du Dimanche daily. He urged the establishment of a “European sovereignty fund” to finance economic endeavours within the Union.
In response to US legislation, Lange added that the EU should increase its support for home business.
“We also have to examine whether and how we can reduce energy prices for our industry, as at the moment they are up to ten times higher than in the US,” he stated.
