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Scholz, Macron Threaten Trade Retaliation Against Biden – POLITICO

Scholz, Macron Threaten Trade Retaliation Against Biden – POLITICO

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BERLIN/PARIS – After publicly feuding, Olaf Scholz and Emmanuel Macron have found something to agree on: raising the alarm about unfair US competition and Europe’s need to counter it.

The German chancellor and French president discussed their shared concerns during nearly three and a half hours of talks over a fish, wine and champagne lunch in Paris on Wednesday.

They agreed that the latest U.S. government subsidy plans represent market-distorting measures aimed at persuading companies to shift production to the U.S., according to people familiar with their discussions. This is the problem they want the European Union to solve.

Further, there was an exchange of views on this issue social discord in recent weeks, it has broken what is often seen as a central political alliance between the EU’s two biggest economies on key policy issues such as energy and defence.

But despite their lunches against each other uncomfortable background, both leaders agreed that the EU could not remain without jobs if Washington pushed ahead with its current form of the anti-inflation law, which offers tax cuts and energy incentives to companies that invest on US soil. In particular, recently signed US legislation encourages consumers to “buy American” when it comes to choosing an electric vehicle – an unusual move for major auto industries like France and Germany.

Paris lunch message: EU must strike back if US doesn’t scale back. Such incentive schemes will be necessary for companies to avoid unfair competition or loss of investment. The move threatens to plunge transatlantic relations into a new trade war.

Macron was the first to issue a stern warning. “We need a European purchase act like the Americans, we need to reserve [our subsidies] for our European producers,” said the French president said Wednesday night In an interview with France 2 TV channel, he talked about state subsidies for electric cars.

Scholz and Macron agreed that the EU should act if it promotes the “Buy American” act, which would encourage companies to invest on US soil, which would particularly affect the French and German electric car industries | David Hecker/Getty Images

Macron also highlighted similar concerns about China’s state-subsidized competition: “You have China protecting its industry, the US protecting its industry and Europe with an open door,” Macron said.[Scholz and I] There was a real convergence to move forward on the topic, we had a very good conversation.”

More importantly, Berlin, which has traditionally been reluctant to stand up to the US in trade disputes, is actually backing the French push. Scholz agreed that if Washington refuses to address key concerns raised by Berlin and Paris, the EU should use countermeasures similar to the US scheme, according to people familiar with the chancellor’s thinking.

Scholz is not a big fan of Macron’s Buy European Act formulation because it evokes the nearly 90-year-old Buy American Act, which is often criticized as protectionist because it favors American companies. But the chancellor shares Macron’s concerns about unfair competitive advantages, the people said.

Earlier this month, Scholz made it clear that Europe should discuss the anti-inflation law with the US “very deeply”.

A blow to Germany’s industrial core, chemical giant BASF announced It plans to cut business activity and jobs in Germany on Wednesday, citing rising gas prices, which CEO Martin Bruderm├╝ller criticized as six times higher than in the US, as well as tougher EU regulations.

“The decisions of a successful company like BASF show that Germany needs to increase its overall attractiveness as a business location,” said German Finance Minister Christian Lindner. tweetpromised various measures such as “tax breaks for private investments”.

Before pulling out the big guns, Scholz and Macron are trying to negotiate a solution with Washington. This should be done through the “EU-US Working Group on Reducing Inflation”, which has been established. during the meeting Tuesday between European Commission President Ursula von der Leyen and US Deputy National Security Adviser Mike Pyle.

A working group of EU and US officials will meet via video conference later next week to stress the importance of the European push.

Moreover, the trade ministers of the European Union will gather in one place informal meeting Next Monday in Prague, US Trade Representative Catherine Tay is scheduled to attend to discuss the tensions.

In Brussels, the Commission is also concerned about Macron’s formulation of the “Buy for Europe Act”, which would fuel the protectionist tendencies that the EU institution has long sought to combat.

“Every measure we take must be in line with the rules of the World Trade Organization,” the Commission official said, adding that Europe and the US should resolve differences through negotiations and “not resort to trade war measures, as we have experienced.” below them [former U.S. President Donald] Trump.”

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