BRUSSELS (AP) – Two years after the election of US President Joe Biden, a transatlantic trade deal to restart relations with the European Union has come to a screeching halt. EU leaders are openly talking about wars, not just friendship.

They say conflict with Washington It’s the last thing they want when war breaks out on their doorstep in Ukraine. And a common decision is necessary to stop Russia. But money is a threat to that unity.

“We have a war in Europe. What we want is the last trade war,” European Commission Vice President Margrethe Vestager told lawmakers on Wednesday.

Many of the 27 countries have been disputing US policies that they see as keeping their old and loyal ally out of the lucrative US market. The point of contention is the US Inflation Act.A $369 billion plan that subsidizes US-made climate technology and unfairly discriminates against companies like the EU.

Transatlantic partners have long prided themselves on free trade without excessive subsidies and protectionism, and the law felt to Brussels that it betrayed the spirit of fair competition, just as it did in Washington.

“IRA bodies risk leveling the playing field and discriminating against European companies,” European Commission President Ursula von der Leyen said on the eve of the end-of-year summit.

While transatlantic ties may strengthen their alliance in the face of Russia and a more assertive China, there are many signs of fragmentation. It’s even more surprising that European leaders have welcomed Biden’s arrival. Two years ago, under Donald Trump, after four years of broken relations, a return to warm relations and mutual commitment.

Trade disputes have become a red line Highlighted by decades of fighting in trans-Atlantic relations, it affects everything from aircraft subsidies and steel exports to hormone-treated beef and liquor exports.

The subsidies proposed by the US Congress in August will be particularly beneficial to the European Union. For example, electric car buyers are eligible for up to $7,500 in tax credits as long as the vehicle is powered by a North American-made battery that can be recycled or mined on the continent.

In addition to addressing member state leaders, von der Leyen went to the EU legislature on Wednesday to air her grievances.

“Three aspects in particular are very worrying. First, the ‘Buy America’ logic that supports large parts of the IRA. Second, tax breaks that can lead to discrimination. And third, product subsidies that can harm European companies. We need to address these,” she said.

There were signs of a coming tit-for-tat subsidy competition.

“We have to give our answer – our European IRA,” von der Leyen said. “We need to ensure that investment aid and tax credits reach the relevant sectors easily and quickly.”

The head of the European Union’s executive body said she would present the first plans next month.

Von der Leyen’s offices, representing the 27 member states, are negotiating on trade issues and the European summit on Thursday, and she needs all the support she can get.

Beyond jumping on the subsidy and protectionist bandwagon, other measures the EU can take are complaints before the World Trade Organization or trade sanctions.

Biden acknowledged “shortcomings” in the law and said earlier this month that “there are changes we can make” to appease allies with French President Emmanuel Macron. But a Democratic lawmaker who was a key architect of the measure said he had no interest in reopening it.

But with eight rounds of sanctions against Russia and the need for unity with Ukraine clearly standing shoulder to shoulder, von der Leyen wanted to put things in perspective.

“Let’s never forget what’s big. There is a war going on at the border,” she said. This is not the time for a trade war with our closest ally and friend.


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