Inflation Reduction Act: European Carmakers Continue to Miss Out

by | 8. Apr 2024 - 10:12 | Politics

Meeting of the E.U.-U.S. Trade and Technology Council fails to reach an agreement.

European car manufacturers will still not benefit from the U.S. “Inflation Reduction Act” (IRA) subsidies. The sixth meeting of the EU-US Trade and Technology Council (TTC), which ended on Friday, made no progress, as Handelsblatt and other news agencies reported. At the heart of the matter was a “Critical Minerals Agreement,” i.e., a raw materials agreement comparable to the U.S. free trade agreements with its neighbors Mexico and Canada. Electric vehicles containing critical minerals extracted and processed in the E.U. would be eligible for funding under the IRA if such an agreement would be made.

However, participants at the meeting emphasized that work on an agreement would continue. However, the TTC will not meet again until after the presidential election in the USA, which will take place in November, and Donald Trump is again standing for election. In this context, the news portal Euractiv points out that the TTC was initiated by E.U. Commission President Ursula von der Leyen and U.S. President Joe Biden in 2021 to “improve transatlantic relations after Trump’s presidency.” Much will, therefore, depend on the outcome of the election.

According to Reuters, one issue in particular is holding back the realization of the raw materials agreement: Compliance with labor standards in production, i.e., in Europe, which the U.S. also wants to monitor locally if necessary. The tough stance of the United States, which has probably prevented an agreement for the time being, is, in turn, likely to be an omen of the election campaign. According to Handelsblatt, incumbent Joe Biden would strengthen his opponent Trump with any concessions to Europe.

Photo: iStock/Oleksii Liskonih

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