President Biden’s trade chief said the US administration wants to avoid a subsidy race on electric vehicles and is working with the European Union to resolve its concerns that a new law puts the bloc at an unfair disadvantage.
(Bloomberg) — President Biden’s trade chief said the US administration wants to avoid a subsidy race on electric vehicles and is working with the European Union to resolve its concerns that a new law puts the bloc at an unfair disadvantage.
“I have heard people very concerned that we don’t want a subsides race,” US Trade Representative Katherine Tai said in a Bloomberg TV interview with David Westin at the World Economic Forum in Davos, Switzerland.
“No one disagrees with that. If we focus on what healthy competition looks like, where cooperation is required, our track record has demonstrated ability time after time to work through thorny issues,” she said.
Last year’s Inflation Reduction Act offers subsidies and tax credits for the production of electric vehicles, renewable electricity, sustainable aviation fuel and hydrogen. Some of the largest US trading partners — most importantly the European Union — say the measures will unfairly benefit US companies and violate World Trade Organization rules.
EU policymakers are concerned that the law could lure investment to the US that would otherwise flow to Europe if there were a more level playing field.
The EU says the law provides unfair subsidies to US manufacturers and threatens to undermine the transatlantic relationship. The US and EU have set up taskforce, and Tai met with Europe’s top trade official, Valdis Dombrovskis, this week. Dombrovskis said that the two are actively negotiating EU exemptions to the law’s domestic-content requirements for electric-vehicle batteries, among other issues.
Asked if the two sides could avoid a WTO dispute, Tai said that “there is always room to have that political conversation” and “room to understand each other better and map out a path ahead where we can be working together cooperatively.”
South Korea has also pushed back against the subsidies. Tai said that talks with allies are “constructive” and “honest,” and that they understand the US desire to address the climate crisis.
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