WASHINGTON — President Biden’s efforts to bolster domestic manufacturing have come under diplomatic attack from key allies as European governments push across the Atlantic with “Made in America” policies that threaten their own economies. accuses his regime of undermining the alliance.
At the center of the challenge are policies contained in the Reducing Inflation Act, which provides financial incentives for foreign suppliers to locate factories in the United States and produce products, including electric vehicles. It aims to reduce US dependence. Biden said the law “will be key to creating tens of thousands of high-paying jobs and clean energy manufacturing jobs, solar farms in the Midwest and South, wind farms on the plains and off the coast, clean hydrogen projects, and more.” is advertised. — All of America, every part of America. “
But this has sparked protectionist cries by foreign officials and accusations that the Biden administration is violating trade laws by favoring U.S.-based companies.
European Union Trade Commissioner Bardis Dombrovskis told reporters in Washington: “We are concerned that many of the provisions are discriminatory against EU companies, which is of course a problem for us. There is,” he said.
The disagreement represents the first major rift between the US and Europe since Mr. Biden took office last year. The president, who has promised to take a milder diplomatic touch than the Trump administration has had in its “America First” agenda, has been working closely with European allies on a number of priorities, including punishing Russia’s aggression in Ukraine. have cooperated. In his first few months in office, Mr. Biden moved swiftly to mend ties with Europe, including resolving a 17-year dispute over air subsidies.
But the united front between the US and Europe showed signs of tension at this week’s annual meetings of the World Bank and the International Monetary Fund. European officials told Biden administration officials that broad climate and energy law provisions to support domestic production of electric vehicles would require countries to treat foreign and domestic firms equally. complained of breaking the rules. They argued that the regulations were unfair to the domestic auto industry.
Dombrowskis and other European officials said they would direct their concerns to Treasury Secretary Janet L. Yellen. Treasury Secretary Yellen’s agency, along with U.S. Trade Representative Catherine Tai and U.S. Trade Representative Gina Raimond, are responsible for implementing much of the law. secretary.
In a meeting with Dombrowski on Thursday, Tai “shared her view that more investment in clean energy technologies is needed to seriously tackle the climate crisis,” the US trade representative said. said in a statement. Both Tai and her Dombrovskis “asked the team to get more involved” on the issue.
European officials have challenged laws passed by Democrats in line with party lines at the World Trade Organization, which can be time-consuming and futile, or formally through the Trade Technology Council, which was set up last year. We are discussing whether to raise an issue with .
The heart of the international battle centers on more than $50 billion in tax credits to encourage Americans to buy electric cars. Law limits credit to vehicles assembled in North America. There are also stringent requirements for the components that power electric vehicles, such as batteries and the critical minerals used to make them. This creates new incentives for battery manufacturers to build recycling and production facilities in the United States.
Foreign companies that manufacture automobiles and auto parts in the United States are also eligible for credit. However, some foreign automakers, particularly those in Asia, tend to import more parts for their electric vehicles from outside the United States, which means fewer models are covered. increase.
Despite the large number of foreign companies investing heavily in the United States, the terms of the law tend to favor US companies such as General Motors and Ford rather than foreign companies such as Toyota and Honda. It provoked the accusation that it was written.
Eduardo Maia Silva, spokesman for the National Security Council, said: “Some trading partners have concerns about how the EV tax credit provisions in the law will work in practice with respect to producers. “We are committed to working with our partners to better understand their concerns and to maintaining open channels to engage on these issues.”
European officials fear U.S. law will drive a wedge between European firms and their home countries if automakers such as Porsche are pressured to set up factories in the U.S. instead of building more in Germany. Since this law came into force, Honda, Toyota and South Korea’s LG Energy Solutions have both announced major battery investments in the US.
Previous versions of the bill provided the tax credit only for vehicles manufactured in the United States.However, Canada and Mexico both worked on For that draft version, the measure was eventually expanded to apply to vehicles produced throughout North America.
Allies in Asia have also expressed concerns about the law.
When Vice President Kamala Harris met with South Korean leaders in Tokyo and Seoul last month, allies didn’t hesitate to voice their displeasure.
Hours before Harris attended the funeral of former Japanese Prime Minister Shinzo Abe, South Korean officials, including Prime Minister Han Duk-soo, expressed their concerns about the bill to the vice president in a closed-door meeting.
Japanese goverment also expressed concern.
Frank Aum, a senior expert on Northeast Asia at the U.S. Institute for Peace, said the tax credit was a “direct harm” to South Korean companies such as Hyundai and Kia, which cannot benefit from the tax credit. .
“South Korea feels very betrayed because of the investments it has made in the US electric vehicle battery and semiconductor industry over the past few years,” he said.
Just months before signing the bill, Mr. Biden stood with the chairman of Hyundai in Seoul to celebrate the South Korean company’s investment in a new electric vehicle and battery manufacturing facility in Savannah, Georgia. South Korean President Yoon told reporters in Seoul that Harris said he would consult with South Korea once the law comes into force.
The Biden administration has in the past filed its own complaints about European Union and other government policies that have benefited domestic companies at the expense of foreign companies. downplays tensions with Europe and instead focuses on the scale of investments in green energy.
Trade experts warn that US efforts could trigger a wave of similar protectionist measures comparable to those adopted by the United States.
French Finance Minister Bruno Le Maire said last month that the European Union should consider adopting an electric vehicle bonus for cars produced within the EU and meeting strict environmental standards.
In that case, America could backfire in the long run if American cars and parts face similar barriers to being sold in Europe and Asia.
Chad P. Bown, senior fellow at the Peterson Institute for International Economics, said: “The risk on the U.S. side is that it will end up doing the same if it doesn’t address some of their key concerns. I think,’ he said. .
Deputy Treasury Secretary Wally Adiemo said at this week’s event that he hopes U.S. allies will ultimately benefit from U.S. investments in the production of commodities such as vital minerals.