German and French leaders Olaf Scholz and Emmanuel Macron have recently found common ground amid strained relations between Paris and Berlin: growing concerns about unfair competition from the United States and the potential need for Europe to respond.
This is reported by Politico.
Germany's chancellor and France's president discussed their shared concerns during nearly three and a half hours of talks over a lunch of fish, wine and champagne in Paris on Wednesday.
They agreed that recent U.S. government subsidy plans are market-distorting measures aimed at persuading companies to move production to the U.S., according to people familiar with their discussions. And this is a problem that, in their opinion, the European Union should solve.
Both leaders agreed that the EU cannot stand aside if Washington pushes through its Deflation Act, which offers tax cuts and energy incentives for companies that invest on American soil, in its current form. In particular, a recently signed law in the US encourages consumers to "buy American" when it comes to choosing an electric car - a move that particularly irritates the big car industries of France and Germany.
The takeaway message from the Paris lunch is that if the US does not scale back, the EU will have to strike back. Similar incentive schemes are needed for companies to avoid unfair competition or loss of investment. Such a move risks bringing transatlantic relations to a new trade war.
But before bringing out the heavy artillery, Scholz and Macron want to try to reach a negotiated solution with Washington. This is to be done with the help of a new "EU-US Working Group under the Inflation Reduction Act", which was created during a meeting between European Commission President Ursula von der Leyen and the US President's Deputy National Security Adviser Mike Pyle on Tuesday.
A working group of EU and US officials will meet by video conference at the end of next week, which will emphasize the seriousness of the European side's intentions.
In addition, EU trade ministers will meet next Monday for an informal meeting in Prague, with US Trade Representative Catherine Tye scheduled to attend, to discuss tensions.