Dec. 5 (UPI) — European Commission President Ursula von der Leyen on Sunday expressed concern that the United State’s Inflation Reduction Act could cause an unfair economic playing field in regard to overseas companies with energy subsidies.
Speaking at the College of Europe in Belgium, von der Leyen said the European Union must look closely at the issues with the legislation “and at the same time learn what we could also do better.”
“The Inflation Reduction Act has received so much additional scrutiny in Europe, but also in the rest of the world,” von der Leyen said. “There is a risk that the IRA can lead to unfair competition, could close markets, and fragment the very same critical supply chains that have already been tested by COVID-19.
The law provides U.S. consumers with incentives for purchasing new and second-hand electric cars, heat pumps to warm their homes and electric connections to cook foods, among other subsidies.
But some EU members said they feared the tax breaks created by the Inflation Reduction Act could draw away EU business and create a disadvantage for others on the global stage, possibly starting a trade war.
Von der Leyen said the United State’s “Buy American” approach and tax breaks could “lead to discrimination” against European companies.
“Let me be clear: competition is good,” von der Leyen said. “It drives innovation, enhances efficiency and ensures progress. And in doing so it brings down prices for clean technologies. … But: this competition must respect a level-playing field.
“That is why it is so critical, that the technology competition between the EU and the U.S. is a race to the top for our industries on both sides of the Atlantic.”
The European Union’s competition chief, Margrethe Vestager, has urged caution in the bloc’s reaction to the U.S. law to not create a “tit-for-tat” reaction that could lead to a trade war while the alliance is working together with the United States in a military war against Russia.
