China ready to win transatlantic trade war, says EU minister – POLITICO

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China will be the only winner if a subsidy war breaks out between Europe and the United States, warned the Czech minister who chaired a meeting of European trade ministers on Friday.

“Gathering grants is a very dangerous game,” Jozef Síkela told reporters in Brussels.

“The winner could then sit on [another] continent – neither in Europe nor in the Americas,” said Síkela, Minister of Trade and Industry of the Czech Republic, which currently holds the EU Council Presidency. A spokesperson clarified that Síkela was referring to China.

Trade tensions escalate between EU and US, with Brussels fuming at America Inflation Reduction Actwhich provides $369 billion in grants and tax breaks to US green businesses like electric cars and renewable energy.

EU countries fear that the US law – key parts of which will come into force on January 1 – could suck investment out of Europe and hollow out the bloc’s industrial base.

Around $200 billion in US donations are illegal under World Trade Organization rules, French Trade Minister Olivier Becht says Told journalists before the meeting.

If the US doesn’t change its Inflation Reduction Act, the EU should use ‘coercive’ measures to ensure EU companies get the same terms as US companies, Becht also said. said.

The clash comes at a time when Western governments are already under enormous fiscal pressure due to the energy price shock caused by the war in Ukraine and the aftermath of the COVID-19 pandemic. With the global economy already on the skids, a rat race for subsidies could prove ruinous – with Europe facing greater risks as it lacks the financial firepower to take on Washington.

tit for tat

Germany and France are ruminating tit-for-tat retaliation against the United States in the form of a “Buy European” law which would encourage European consumers to buy locally produced products.

And if things get worse, the EU could retaliate by imposing tariffs and duties on US-made products. It could also deploy a new international procurement instrument which closes public tenders to companies from countries that discriminate against the bloc, an EU diplomat has said.

But EU trade chief Valdis Dombrovskis urged people to see the big picture, stressing the need to maintain transatlantic unity in the face of Russia’s invasion of Ukraine.

“I was in Kyiv last Friday. The situation is dire, with continued Russian attacks on vital infrastructure. People were deprived of water, heat and electricity,” Dombrovskis said.

“We must deepen and sharpen transatlantic unity in the face of these horrific attacks. And we need the United States to maintain its support so that Ukraine can win this war.”

Against this bleak geopolitical backdrop, Dombrovskis warned of “the danger of confusing the Inflation Reduction Act with our broader relationship with the United States.”

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