"The US government is the initiator of Europe's wealth outflow"

On November 7, the finance ministers of the eurozone countries met in Brussels, and the finance ministers of France and Germany fiercely criticized the US government's policy of heavily subsidizing the local electric vehicle industry. Thierry Breton, the European Commission's commissioner for internal market affairs, said the U.S. was acting contrary to the principles of the World Trade Organization and that if the U.S. did not take into account the ideas of its European partners, the EU would take "retaliatory measures" and take the dispute to the WTO for resolution. The trade dispute between the European Union and the United States over industrial policies such as clean energy subsidies under the Inflation Reduction Act has attracted international attention.

Many EU countries have severely criticized the United States

At the meeting, many EU finance ministers expressed strong dissatisfaction with the clean energy subsidy policies in the US Inflation Reduction Act.

Bruno Le Maire, France's minister of economy, finance and industry, and digital sovereignty, said the U.S. Inflation Reduction Act could "endanger the level playing field between European and American businesses" and was raising "serious concerns about the French government."

German Finance Minister Christian Lindner warned that the United States is completely unaware of the concerns of the European Union, and the US government must know that the bill will bring serious consequences to the market, and the two sides should try to avoid a "for tat" or even a trade war.

Earlier, at the press conference of the informal meeting of EU trade ministers, Dombrovskis, executive vice president of the European Commission responsible for economic affairs, pointed out that many green subsidies under the US Inflation Reduction Act pose unfair competition for the EU's automotive, renewable energy, battery and energy-intensive industries. Czech Trade and Industry Minister Sikla said the US Inflation Reduction Act was "unacceptable".

In August, US President Joe Biden signed the Inflation Reduction Act, which will take effect in 2023. The bill states that over the next decade, the United States will invest about $430 billion to combat climate change, develop clean energy and strengthen health care, including about $370 billion in clean energy subsidies. The bill stipulates that electric vehicles that meet the conditions for final assembly in North America and the main source of batteries in North America can receive a $7,500 tax credit. This policy will give North American-produced electric vehicles a stronger price competitive advantage in the U.S. market.

According to the US "Politico" report, German Chancellor Scholz and French President Emmanuel Macron have recently been worried about the US White House's Inflation Reduction Act, which they believe "implements a protectionist policy" and tries to encourage companies to move production to the United States through tax cuts and energy subsidy programs. German and French leaders say the EU will fight back if the United States does not budge. The EU will also subsidize companies, which could plunge the United States and Europe into a new trade war. Macron recently said in a speech on French TV 2: "We need to introduce a "Buy European Goods Act" like the United States." We need to set aside subsidies for our European manufacturers. ”

Recently, due to multiple factors such as soaring energy prices, high inflation, and fluctuations in the euro exchange rate, there have been signs of EU corporate supply chains shifting to the United States. Germany's BMW AG announced in October that it would invest USD 1.7 billion to produce electric vehicles in South Carolina, USA. Not long ago, ArcelorMittal, one of the world's largest steelmakers, said it had closed two plants in Germany and switched to a plant in Texas to continue production due to soaring electricity costs. Dutch fertilizer giant OCI has slashed ammonia production in Europe, investing hundreds of millions of dollars to expand its plant in Beaumont, Texas, USA. Earlier this year, Germany's Volkswagen also announced plans to expand its U.S. operations.

According to an article on the Financial Times website, France will lose an estimated 8 billion euros ($7.95 billion) as companies turn to the United States because of some incentives. The industrial policy related to clean energy subsidies in the US Inflation Reduction Act has made things worse for EU industries that have been hit hard by the Russia-Ukraine conflict.

According to an article published on the website of Europe's "Modern Diplomacy", the US government is the initiator of the outflow of wealth from Europe. As Europe's wealth continues to flow out, mostly to the United States, Europe will become increasingly backward. There is a growing recognition that Europe's real enemy is the United States.

Intensifying EU "deindustrialization"

"The subsidy program in the US Inflation Reduction Act will have a greater impact on EU enterprises and have a far-reaching impact on EU-related industries." Sun Yanhong, director of the European Economy Research Office of the Institute of European Studies of the Chinese Academy of Social Sciences, analyzed in an interview with the overseas edition of People's Daily that the direct impact of the bill is to distort the competition order of the international electric vehicle market, so that EU car companies that do not meet the requirements of "local components" face unfair competition, and then weaken competitiveness.

Sun Yanhong pointed out that the far-reaching impact of the bill on the EU has at least two aspects: First, green transformation is an important part of the new round of industrial revolution. The EU has long been a pioneer and advocate of green transition, and in recent years has taken the development of electric vehicles as an important starting point for promoting green transition. The high subsidy policy of the United States for the local electric vehicle industry will put the EU electric vehicle industry at a disadvantage in international competition, and then weaken Europe's voice in the development of global electric vehicle related standards, which will undoubtedly threaten the EU's leadership in green transformation and put it at a disadvantage in the competition for the new industrial revolution. Second, the current EU is deeply involved in the energy crisis caused by the Russia-Ukraine conflict, manufacturing production and operating costs are high, and the trend of "deindustrialization" is accelerating. The discriminatory and huge subsidy policy of the bill will further encourage European manufacturing, especially electric vehicle companies, to shift their supply chains to North America, exacerbate Europe's "deindustrialization", cause the loss of manufacturing jobs, and endanger Europe's social stability and long-term economic development.

Data show that by the end of September this year, the production capacity of high-energy-consuming industries such as aluminum, zinc, iron and steel, and chemical industry in the EU has shrunk by nearly half due to the suspension or relocation of production. At the same time, a number of companies representing the high-end quality of European manufacturing have also declared bankruptcy or faced an existential crisis. According to a number of institutions, Europe will usher in a more violent wave of bankruptcies in 2023.

Wang Shuo, a professor at the School of International Relations of Beijing Foreign Chinese University, analyzed in an interview with a reporter from the overseas edition of People's Daily that although the transatlantic partnership and value alliance between the United States and Europe are closely linked, the competition between the two sides in trade, finance and other economic fields has always been very fierce.

"The United States provoked the Russian-Ukrainian conflict, which not only strengthened its control over the EU, but also divided the unity within the EU, and took a handful of EU 'wool' in all directions." Wang Shuo analyzed that the US liquefied natural gas energy giant sold energy to European countries at high prices in the process of soaring energy prices; The US military-industrial giants use European countries to strengthen security and defense, and sell a large number of weapons and armaments to Europe; The Fed continued to raise interest rates, triggering the European Central Bank to be forced to follow interest rate hikes, the euro and pound fell to record lows against the US dollar, and Wall Street financial giants took advantage of the flow of European capital to the United States to make huge profits; Soaring energy prices, rising manufacturing costs and declining export earnings have put heavy pressure on EU manufacturing enterprises, and the outflow of chemical and energy-related enterprises has further aggravated the trend of hollowing out European industries... On the whole, since the Russian-Ukrainian conflict, the United States has taken advantage of the fire and robbed and has grabbed huge economic benefits from Europe.

Consider retaliatory measures

Bloomberg News reported on its website that in late October, the United States and the European Union formally established the Inflation Reduction Act working group. U.S. and European officials will hold the first meeting of the working group in the near future to address EU concerns about the Inflation Reduction Act. The meeting will be a key test of Biden's efforts to improve the transatlantic partnership. In addition, U.S.-EU tech-to-trade committees will meet on Dec. 5, and U.S. clean energy subsidies will be a key topic, and European officials hope the meeting will move from technical discussions to specific, achievable content.

"Theoretically, in the face of the high subsidy policy of the United States, the EU can respond by increasing subsidies in related industries." However, at the practical level, the feasibility and effect are not optimistic. Sun Yanhong analyzed, first of all, the financial resources at the EU level are limited, and it is impossible to come up with subsidy funds comparable to the scale of the United States, and it is difficult to give a subsidy plan that satisfies the vast majority of member states; Second, in order to maintain the normal operation of the European single market, EU competition policy has clear restrictions on state aid for member states, and if member states are allowed to compete for subsidies, their single market will be seriously distorted; Finally, a subsidy race with the United States would seriously undermine the international trading order and would not be in line with the EU's core proposition of preserving a free and open international economic order. In view of this, if the United States continues to implement the subsidy policy of the Inflation Reduction Act, the EU may take two measures to respond: first, at the multilateral level, through the World Trade Organization's countervailing procedures, force the United States to correct its subsidy behavior to a certain extent; Second, at the bilateral level, import tariffs on electric vehicles produced in North America will be imposed to offset the unfair competition caused by their domestic markets in Europe.

"The policies related to high subsidies for clean energy in the US Inflation Reduction Act are protectionism in disguise and violate the principle of fair trade, which is still the logic of 'America First'." Wang Shuo believes that the selfish measures of the United States have once again made Europe see clearly that there is no essential difference between Republicans and Democrats in safeguarding US interests, and the contradiction between the core interests of the United States and Europe has always existed. The EU's political concerns about the United States will intensify, and mistrust and rifts in relations may also deepen. However, under the current overall situation of the United States and weak Europe, the EU cannot get rid of its security dependence on the United States and NATO, and is also trapped by the energy crisis and inflationary pressures. In the future, it is worth continuing to observe how the US-EU Inflation Reduction Act working group will play its consultative function, and how the United States and Europe will resolve other trade issues such as clean energy subsidies under the framework of the US-EU Trade and Technology Council and find a "package" solution. (Reporter Gao Qiao)