EU should adapt state assist guidelines in face of US inexperienced subsidies, Ursula von der Leyen warns

The EU should “simplify and adapt” its guidelines on state assist in response to the US’s new $369bn local weather bundle, which has soured transatlantic ties and sparked fears of a commerce conflict between Brussels and Washington, European Fee president Ursula von der Leyen mentioned on Sunday.

Europe ought to “regulate our personal guidelines to make it simpler for public investments”, von der Leyen mentioned, in her first set of proposals to reply to a refrain of calls for from EU states to counter the US subsidy scheme.

“The brand new assertive industrial coverage of our rivals requires a structural reply,” she mentioned in a speech on Sunday.

US president Joe Biden has hailed the Inflation Discount Act (IRA) as essentially the most “aggressive motion” the US has taken to confront the local weather disaster.

However European allies have complained about measures equivalent to tax credit and subsidies for merchandise equivalent to electrical automobiles, wind generators and inexperienced hydrogen that they are saying would give US-based enterprises an unfair benefit and lure EU industries to relocate.

In response, von der Leyen mentioned the EU should overhaul its public funding rules, reassess whether or not “new and extra funding on the EU stage” was required and proceed to push the US to regulate the IRA to resolve contentious points.

“There’s a danger that the IRA might result in unfair competitors, might shut markets and fragment . . . crucial provide chains,” von der Leyen mentioned. In response, the EU ought to “take motion to rebalance the enjoying subject . . . [and] enhance our state assist frameworks”.

“We’re very cautious to keep away from distortions in our single market. It is vitally necessary. However we should even be conscious of the growing world competitors on clear tech,” von der Leyen added. “If we see that investments in strategic sectors are leaking away from the European Union, this could solely undermine the only market. And that’s the reason we are actually reflecting on the best way to simplify and adapt our state assist guidelines.”

Von der Leyen’s remarks come three days after Biden, whereas internet hosting French president Emmanuel Macron in Washington, mentioned he was open to addressing EU issues and that the US didn’t intend to harm its allies.

“There are tweaks that we will make that may basically make it simpler for European international locations to take part or be on their very own, however that also must be labored out,” Biden mentioned.