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Monday’s EU-US trade talks overshadowed by tax concerns

United States Secretary of State Antony Blinken gestures during a press conference in Bucharest, Romania, Nov 30, 2022. (VADIM GHIRDA / AP)

COLLEGE PARK, Maryland – Top European Union officials are aiming to be more vocal at a trade meeting with their US counterparts on Monday in their criticism of President Joe Biden's climate law that would cut off the bloc's electric vehicles from US tax credits.

The US-EU Trade and Technology Council, a year-old transatlantic forum for dialogue, focused in its first two meetings on regulatory cooperation.

But the 27-country bloc fears that the $430-billion Inflation Reduction Act with its generous tax credits of $7,500 for Tesla, Ford and other North American-made EVs, will significantly damage European automakers.

French Finance Minister Bruno Le Maire said he and German economy minister Robert Habeck have started talks with their US counterparts on exemption for all EU-made green products. But he also said the EU needed its own equivalent of the IRA.

European Commission head Ursula von der Leyen said on Sunday the EU would adapt its state aid rules to prevent an exodus of investment triggered by the IRA.

The topic is on the agenda of the TTC meeting on the University of Maryland campus in College Park, Maryland, US and EU officials said.

Participants include US Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo, US Trade Representative Katherine Tai and European Commission Executive Vice-Presidents Valdis Dombrovskis and Margrethe Vestager.

READ MORE: Lawmaker: EU should complain to WTO over US green subsidies

Joint statement

In a Dec 1 draft of a joint statement to be issued later on Monday, the EU and the US are to say, "We acknowledge the European Union's concerns and underline our commitment to address them constructively"

In a Dec 1 draft of a joint statement to be issued later on Monday, the two sides are to say, "We acknowledge the European Union's concerns and underline our commitment to address them constructively."

The draft document, which was seen by Reuters and may still be revised, did not set out specific measures.

"The Inflation Reduction Act will be part of the range of discussions on trade," a spokesman for the White House National Security Council said in a statement.

The US side was "committed to continuing to understand EU concerns" through a newly established task force, the spokesman added.

The meeting would produce a "joint roadmap" on evaluating and measuring trustworthy artificial intelligence technologies as well as a task force to reduce research barriers related to quantum computing science and technology, the spokesman said.

Executive order on IRA

European and South Korean officials criticized the Inflation Act at the G20 Summit in Indonesia last month. During his state visit to Washington last week, French President Emmanuel Macron told broadcaster CBS it was a "job killer" for Europe.

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Biden told Macron in Washington that there could be "tweaks" to the law to make it easier for European countries to participate in the credits.

French officials say they are hopeful an executive order from the White House could give European nations a break, without the need for seeking revisions from Congress – a move the White House wants to avoid.