IA few days ago, Emmanuel Macron spun the metaphor in front of the participants at the Asia-Pacific Economic Cooperation Summit to describe the strategic confrontation between China and the United States: “We are in the jungle and there are two big elephants that are getting more and more nervous. If they (…) are going to war, it will be a big problem for the rest of the jungle”, calling to “the cooperation of other animals: tigers, monkeys…”
In fact, the “problem” is already there. The American pachyderm began to move without really taking any precautions vis-à-vis the European monkey or the Korean or Japanese tigers. The plan to fight inflation or Inflation Reduction Act, unsheathed by the Biden administration during the summer, poses a serious threat to the economy of the main allies of the United States. Once again, the European Union (EU) risks having no choice but to protest without much chance of being heard or to allow itself to be crushed without flinching.
This gigantic plan of 369 billion dollars (356 billion euros) is very good news for the fight against global warming, but very bad news for European industry. For two-thirds, it is a huge package of subsidies and tax credits with the aim of attracting investment in wind turbines, electric batteries, green hydrogen or solar energy.
Marginalization of European industry
Than the second CO emitter2 is finally giving itself the means to fight against climate change is commendable. The modalities for achieving this are much less so. The U.S. government will allocate these government grants based on locally made content. Meanwhile, the European market remains wide open to US exports.
In the fierce competition that is looming to attract the investments needed for decarbonisation, the EU risks being the turkey of the farce. Added to this is a competitive differential in terms of energy and high interest rates which make the dollar more expensive and attract capital from all over the world. The marginalization of European industry is on the way.
These discriminatory public aid mechanisms are prohibited by the Trade Organization (WTO). In full knowledge of the facts, the United States deals a new blow to the multilateralism promoted by an already weakened institution. With the Inflation Reduction Act, Europeans have confirmation that “America first » was not just a Trumpist slogan, but an assumed strategy, regardless of the administration in power. To caricature, Biden, when it comes to free trade, is Trump minus the insults.
You have 55.21% of this article left to read. The following is for subscribers only.