Finance ministers from Germany and France urge caution in avoiding trade disputes with the United States over green technology

Christian Lindner, the finance minister of Germany, expressed concern that the Inflation Reduction Act, which was passed by the United States government, could lead to a “trade conflict” between the European Union and the United States. The United States government has adopted a policy that places a priority on the production of clean energy.

Despite this, it “has serious consequences for the economic situation in Europe.” During a meeting of EU finance ministers in Brussels, Lindner stated that this point needs to be made crystal clear. Instead, the minister from the pro-business Free Democrats (FDP) proposed that the European Union (EU) “reach out” to the United States in an effort to find a replacement for the failed transatlantic trade agreement (TTIP). Linder stated, “Perhaps now is the right time,” adding that he is confident both sides have an interest in coming to an agreement. “Perhaps now is the right time,” he said. Lindner emphasized that even in this scenario, the EU “is also capable of acting.” According to Politico, a spokesperson for German Chancellor Olaf Scholz stated that the government was interested in discussing a new trade deal with the United States.

Bruno Le Maire, the French minister who works in tandem with his German counterpart, takes the potential for a trade war very seriously. He has urged the European Union to respond to the policies of the United States with a “coordinated and strong response.” The French economy and finance minister stated, in an interview with the business newspaper Handelsblatt, that potential countermeasures taken by the EU could include “looking out more strictly for our own interests regarding environmental action when it comes to imports or rules that prioritise European products.”

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Beyond that, it is “indispensable” for Europe to ensure that the prices of energy are kept as low as possible in order to support its economy. The minister also stated that the challenges that have been posed to Europe by both the United States and China should be addressed through close cooperation, and he refuted the notion that the French and German axis had been weakened in recent months as a result of the energy crisis. Le Maire stated that there is no deterioration in the political will for collaboration between Paris and Berlin.

The Inflation Reduction Act, which was introduced by Vice President Joe Biden of the United States, includes significant investments in the fight against climate change and in social welfare programs. However, in order to qualify for tax rebates, electric vehicles must use a certain percentage of batteries made in the United States. This quota is one of the conditions of the program that provides financial assistance. The European Union has stated that the measures taken by the United States government are discriminatory against the European Union because goods manufactured in Canada or Mexico are exempt from the policy.

The EU trade commissioner Valdis Dombrovskis stated that first results could be expected by the beginning of December if the consultations on the impending trade conflict are successful. The consultations were started by delegates from both Europe and the United States. A number of years ago, negotiations regarding the Transatlantic Trade and Investment Partnership (TTIP), which was the most recent attempt at a trade deal, were unsuccessful as a result of a lack of political support following widespread public opposition to the plan, particularly in Germany.

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