N. Peter Kramer’s Weekly Column
The European Commission wants to hit back to the US Inflation Reduction Act. A $369 billion package for US companies only, by helping them switch to a greener way of working. The effect of President Biden’s initiative, embraced by the US Congress, can be disastrous for the EU economy. The IRA offers a gainful possibility to non-US companies to move (a part of) their activities to the US and to foreign investors to put their money in US companies profiting of the IRA.
France’s EU Commissioner for industry, Thierry Breton, is in the lead to support what he is calling an EU Inflation Reduction Act, to subsidise EU’s domestic industries to prevent them of being wiped out by the US act. Macron supports him. But more traditionally free-trading nations such as the Nordics and The Netherlands are sceptical about it. Also EU’s Competition Commissioner, the Danish liberal Margrethe Vestager, is less outspoken in pushing back against subsidies recently. Although she appears to realise that Breton has the backing of Paris and a part of the German Government: the Greens.
The EU ambassador of Sweden, that has the rotating EU presidency the first half year of 2023, warned that ‘we should always be very careful with state aid’ to avoid interfering with the market. Whether EU member states can find consensus on the tweaked state aid rules will depend now on what the Commission proposal will look like.
