Monday, 27 March, 2023

EU eyes trade deal with US to access green benefits

WASHINGTON: The European Union is seeking a trade agreement with the United States that will allow the EU to access some benefits under President Joe Biden's ambitious climate plan, an EU official said Friday.

Officials are hoping to make progress on this as early as next week, when Biden hosts European Commission chief Ursula von der Leyen at the White House, reports AFP.

In those talks next Friday, Western support for Ukraine, relations with China, and transatlantic trade friction are expected to top the agenda.

During the visit, both sides plan to try and reach an in-principle agreement on issues such as access to raw materials, the EU official said, speaking on condition of anonymity.

European leaders are concerned that Biden's landmark Inflation Reduction Act (IRA) -- a vast climate plan aimed in part at reducing dependence on Chinese imports -- could come at the expense of European jobs, especially in the energy and auto sectors.

While the IRA allows "certain alleviations when it comes to partners who have a Free Trade Agreement-like status," the EU does not have such an accord with the United States, the official said.

"The good thing is, of that description in the Inflation Reduction Act... you can also have something else which looks like an FTA, which can be more limited," the official added.

"That is exactly what we're working on," he said.

The IRA includes $370 billion that goes towards reducing greenhouse gas emissions.

The act involves tax cuts for companies that invest in clean energy, along with subsidies for electric vehicles, batteries and renewable energy projects -- if they are manufactured in the United States.

But the climate action plan also allows some exceptions for countries which have free trade agreements with the US.

For now, the EU official said the aim is to avoid a "subsidy race" which he called "a lose-lose situation for both sides."

Noting that the US and EU have the same objective of fighting climate change and of keeping certain non-market economies under control, "with all these shared objectives, let's not step on each other's toes," he said.