European Commission President Ursula von der Leyen said today that the United States and the European Union should invest together in clean technology and not risk a devastating trade war.
Von der Leyen said in a speech at the College of Europe in Bruges that in the face of climate change and competition from China, the United States and the European Union have a broad common interest in maintaining industrial leadership.
The most senior official in the European Union, according to the German news agency, made an appeal to Washington with growing concerns in Europe about Washington’s recent historic $700 billion bill called the “Inflation Reduction Act.”
The legislation guarantees tax breaks for US consumers who buy electric cars with batteries manufactured domestically and in some countries with free trade agreements with the United States. Although the European Union and the United States are major trading partners, they do not have such an agreement.
The European Union, which includes many prominent automakers, fears that this will cause losses to its manufacturers, with some calling for a similar public investment policy in response.
Von der Leyen said the EU and the United States would continue to work together to resolve the issue but cautioned that the bloc would respond as necessary to Washington’s clean technology programme.
She added that the United States and the European Union should jointly invest in two clean energy industrial bases on both sides of the Atlantic, noting that the EU’s usual strict public investment rules must be relaxed to do so.
She also said the United States and the European Union should work more closely jointly to set regulatory standards for electric vehicles.
She added that Washington and Brussels should cooperate more closely to obtain and produce vital raw materials and limit China’s advantages in this sector.