EXPLAINER: US-European differences on climate law persist

EXPLAINER: US-European differences on climate law persist thumbnail

WASHINGTON — President Joe Biden on Thursday tried to allay concerns raised by French President Emmanuel Macron about a clean energy law that benefits electric vehicles and other products made in North America. The landmark law is still controversial in the United States and Europe.

Hours prior to hosting Macron at a dinner. Biden acknowledged that the law contains “glitches,” but said “there are tweaks we can make” to satisfy France and other European allies.

” The United States does not apologize. Biden stated that the United States does not apologize. However, Biden indicated that changes to the law, which is now four months old, may be necessary to make it easier for European countries. ”

Macron has made clear that he and other European leaders are concerned about incentives in the law, known as the Inflation Reduction Act, that favor clean energy technology made in North America, including electric vehicles.

The U.S. subsidies would cause a huge setback to European companies, but the French leader stated that he was hopeful that the dispute could be resolved peacefully.

Despite Biden’s conciliatory remarks, many Democratic members of Congress stated that they do not plan to revisit the issue in new legislation.

Here’s an overview of the disagreement between European allies regarding clean energy and jobs.

WHAT ARE THE MAIN POINTS OF CONTENTION?

The U.S. clean-energy industry and buyers of electric vehicles made in North America will benefit from new and extended tax credits. They are worth approximately $375billion. The credits were included in the expansive climate law by Democrats to encourage domestic electric vehicle production. However, South Korean and European manufacturers who sell millions of vehicles in America have threatened to file complaints with the World Trade Organization.

” Macron stated earlier in his Washington visit that the choices made “will fragment the West” as well as discourage U.S. investment in Europe. He said that the major legislation to boost semiconductors and climate law were not coordinated with Europe and created “a lack of a level playing ground”.

Appearing with Biden at the White House Thursday, Macron was more upbeat. Macron said that the U.S. would “resynchronize” their clean energy efforts to prevent a “domino effect” which undermines European projects.

WOULD A GOOD ARGUMENT BE MADE BY THE EU AT THE WTO

The Europeans would likely have a strong case if they took the dispute to the World Trade Organization, according to Alan Wolff, former WTO deputy chief-general.

WTO rules state that countries cannot simply give money to purchase domestically produced products that are under threat from abroad. Wolff, a visiting fellow at the Peterson Institute for International Economics, Washington, said, “That’s where it went wrong.” “These are prohibited subsidies as far as I can see, and I haven’t met anybody who reads it differently than I do.”’

Macron did not threaten to go to the WTO during his White House visit, but even if the Europeans took their case to the Geneva-based organization, it might not accomplish anything. The WTO’s appeals system has been inactive since late 2019, when the U.S. protested what it considered unfair treatment of the WTO and blocked the appointment new judges to replace the ones who had expired. While the Europeans could file a case, if they win the first round, the United States can appeal and the dispute “would just sat there because there’s not an appellate level,” Wolff said.

The Biden administration could try to slow down some of the clean energy provisions to ease the European objections, but it’s unclear if that would be a long-term solution, Wolff said, adding that he was speaking “as a trade lawyer” while Biden “is looking at it as a president who wants smooth relations with his closest allies.”

There’s no indication that the administration plans to make such an adjustment.

WILL THE CONGRESS MODIFY THE LAW IT JUST ADOPT?

Congressional Democrats have said they have no intention of reconsidering the climate law, which passed after more than a year of negotiations without any Republican support.

“Congress passed a law to rev up the American electric automobile industry, create good-paying American jobs and tackle climate change at the same time. Ron Wyden, a member of the Senate Finance Committee, stated Thursday that he has no plans to reopen it. Wyden is one of the main architects of the law.

“Congress values America’s partnership with the EU, but that cannot mean undermining one of the signature elements of our landmark bill,” Wyden added in a statement emailed to the AP. “And remember that European nations have spent decades subsidizing their prized domestic industries, including aerospace and clean energy. They also passed regulations and taxes aimed solely at U.S.-based tech firms to help them jumpstart their digital businesses. It’s not easy for EU politicians to be scandalized In an interview, Wyden basically challenged Macron and other EU leaders in order to bring the dispute to the WTO. “We placed a special emphasis on creating jobs in America. He said that there is nothing in trade laws that prohibits you from putting a special focus on creating jobs here.

Alternative Democrats, including Debbie Stabenow from Michigan, have also stated that they don’t intend to reopen climate law.

Sen. Raphael Warnock (D-Ga.), has meanwhile urged the Treasury Department for “maximum flexibility” in implementing the tax credit to Americans who buy electric vehicles. South Korean automaker Hyundai could lose the credit, even though it is investing billions of dollars in its first American EV plant.

IS THERE A ROOM FOR COMPROMISES?

Biden seemed to indicate a willingness to make changes to the law to accommodate Europe. However, it was clear that the U.S. legislators did not intend to punish France and other allies.

“”When writing a huge piece of legislation that has…the largest investment in climate-change in all history, there’s obviously going be glitches and need to reconcile those changes.” Biden stated Thursday at a joint press conference with Macron.

Biden mentioned a provision that benefits anyone who has a free-trade agreement with the U.S., which includes Canada and Mexico. “Well, that was added to by a member the United States Congress who acknowledged that he only meant allies. He didn’t mean free trade agreement. So there are many things we can do,” Biden stated.

Biden didn’t name names, but West Virginia Senator Joe Manchin, a conservative Democrat, added the provision to boost electric vehicles made in North America. Manchin has been both a political ally as well as a foe of Biden. The final approval of climate legislation was made possible by Manchin’s vote.

A Manchin spokeswoman declined comment Thursday.

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Associated Press writers Paul Wiseman and Kevin Freking contributed to this story.

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