Europe and the US want to reduce their dependence on China

Following their recent meeting within the framework of the Trade and Technology Council (CTC), European and American leaders are seeking to finish one Big deal ยป on semiconductors and electric vehicles to counter China.

Europe and the US are looking for the right compromise

The European Union and the United States seem to agree on one point: It is necessary reduce their dependence on China. They also agree that no one can achieve this alone and develop an entire supply chain. That was the subject of a recent meeting between Foreign Minister Antony Blinken, Trade Minister Gina Raimondo, Trade Representative Katherine Tai, Competition Commissioner Margrethe Vestager and Trade Commissioner Valdis Dombrovkis.

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But if the US and Europe seek to make a historic deal, it will The Wall Street Journal reminiscent of old habits of protectionism and a petty squabble resurfaces. South Korea, Japan and the EU complain that electric car subsidies under the Inflation Reduction Act (IRA), discriminate against their producers.

Another important issue: Europe has refused to join the United States in applying new restrictions to Chinese semiconductor companies. In an attempt to reach an agreement, the United States has could therefore take a step towards the EU and ensure that these allies can benefit from their subsidies for electric vehicles.

In the other direction, European states will have to agree to comply with controls on semiconductors. Joe Biden wants to accelerate the transition to renewable energy, relocate American jobs and strengthen cooperation with Europe to counter China. But be careful not to be too protectionist. With the IRA, the US government provides grants of up to $7,500 per electric vehicle, provided it is assembled in North America and the minerals in its battery come from the United States.

The European Commission estimates that this new law risks distort the rules of the game on a global scale and damage a common international goal: the fight against climate change “. Europe criticizes the US for establishing a treatment similar to China’s towards it. To reach an agreement, the Treasury Department could use its administrative discretion to gradually develop the provisions of the IRA.

If the US agrees to move with its European allies on the issue of electric cars, the latter should follow suit on semiconductor restrictions against China.

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