France and Germany eye ‘aggressive response’ to US Inflation Reduction Act

PARIS: France and Germany are eyeing an ‘aggressive response’ to the US Inflation Reduction Act (IRA), said the countries’ respective economy ministers, as they look to ensure the competitiveness of Europe versus the United States.

French Finance and Economy Minister Bruno Le Maire and German Economy Minister Robert Habeck are planning a trip to the United States in January to defend European interests.

Earlier this month, US President Joe Biden said new laws that give incentives for domestic production of computer chips and renewable energy parts were never intended to exclude European allies and could be tweaked.

Biden did not detail what tweaks could be made and legislative options may be slim. There is little appetite on Capitol Hill to reopen fiercely-debated bills, and since they passed this summer Republicans, who are unlikely to take steps to please the Democratic president, have gained control of the House.

France’s Le Maire: US Inflation Reduction Act law is major threat to EU companies

However, France is pressing the White House to use executive powers to loosen some of the incentives in the Inflation Reduction Act, a French government source told Reuters. The climate bill that favors domestic production could possibly restrict trade, European countries say.

Le Maire and Habeck on Monday pledged new measures to support EU green industries.

“We will make sure that the European industry has access to affordable, safe and sustainable electricity so that they can remain globally competitive,” said Le Maire and Habeck in a joint statement.