But beyond the peace, Macron was not afraid to publicly express his criticism of the United States, especially the harm caused by the Inflation Cutdown Act to European companies, and bluntly stated that the subsidy policy may "cause the division of the West."

Reporter of the Economic Business: Li Menglin Reporter of the Economic Business Business: Gao Han, He Xiaotao

On December 1, local time, US President Biden held a grand dinner for the visiting Macron couple at White House . Representatives of entrepreneurs such as Apple CEO O Cook accompanied Hollywood celebrities, pushing Macron's three-day visit to climax.

Macron is the first foreign leader to be received by the Biden administration in accordance with the specifications of state visits. The two sides reaffirmed the deep ally between the two countries and expressed the foreign policy unity in the conflict between Russia and Ukraine. But beyond the peace, Macron was not afraid to publicly express his criticism of the United States, especially the harm caused by the Inflation Cutdown Act to European companies, and bluntly stated that the subsidy policy may "cause the division of the West."

In August this year, Biden signed the Inflation Cut Act worth approximately $750 billion. Among them, the bill says it will provide subsidies of up to $369 billion to support the production and investment of electric vehicles, key minerals, clean energy and power generation facilities, but most preferential policies can only be enjoyed by local American companies or companies that produce and sell in North America.

According to CCTV News citing German media reports, France and Germany leaders believe that the US "Inflation Reduction Act" plans to provide large amounts of subsidies to enterprises in the United States, which will constitute unfair competition and is " trade protectionism ", and EU should not be ignored.

It is worth noting that at the press conference on December 2, Foreign Ministry spokesman Zhao Lijian said in response to relevant questions that the US intends to safeguard its own interests, but does not care about its impact on other countries, including so-called allies and partners. This is another example of the domineering thinking of "America First". In fact, the United States always says that Europe is an important ally, but in fact it regards Europe as a "taker" to block disasters and fires.

There is less than a month left before the Inflation Reduction Act will officially come into effect at the beginning of 2023. Can Europe and the United States effectively control differences and avoid a vicious cycle of trade wars? There is not much time left for both parties.

Europe is dissatisfied with it, Biden said he is willing to "fine-tune" the bill,

Expert: The EU can appeal through WTO

In March this year, Swedish battery giant Northvolt announced that it will invest 4 billion euros to build a large lithium-ion battery factory in Hyde City, northern Germany. Germany is Europe's largest automobile market, and its huge automobile industry is accelerating its transformation to electric vehicles. Northvolt's decision is natural.

However, the Inflation Cuts Act passed by the United States in August made Northvolt change his mind. CEO Peter Carlsson did some calculations and found that under the subsidy policy of the bill, Northvolt could receive government subsidies of up to 800 million euros in building factories in the United States, which is almost four times the subsidy of the German government, not to mention that the US energy prices are much cheaper.

"To such a node, we may have to prioritize expansion in the United States," said Carlson, who is considering postponing plans to plant in Germany.

Since the outbreak of the Russian-Ukrainian conflict, the high energy prices have put European industries under tremendous pressure. Many representative companies have begun to transfer production capacity to the United States, where energy prices are cheap and stable. At the same time, while exporting high-priced natural gas to Europe, the United States also issued industrial subsidy policies to exclude European competitors, which undoubtedly caused the EU to be "stunned in the back" by its allies.

As Europe's dissatisfaction with the United States became increasingly public, Macron arrived in the United States on November 29 and conducted a three-day state visit. The subsidy bill is one of the important issues. However, after detailed discussions with Macron, Biden only expressed his consideration of "fine-tuning" the bill, and the United States does not intend to "apologize" to its allies for this.

"(the bill) never thought of excluding those who work with us," Biden said at a joint press conference with Macron, but "the United States will not apologize." Biden said that some policy adjustments can be made "easier to participate in European countries." However, it is still unclear how to adjust the policy.

Biden (right) holds a joint press conference with Macron. Image source: Associated Press

According to French media reports, Macron hopes that this visit will allow the EU to obtain similar exempt status as Canada and Mexico. The Inflation Cutdown Act subsidies initially excluded Canada and Mexico, which are both under the North American Free Trade Agreement, but were later re-inserted. Clayton Allen, an American expert at the Eurasian Group, a consulting firm, believes that to provide the EU with an exceptional status similar to that of Metz, it takes relegislation to achieve it, and Biden himself has very limited room for maneuvering. However, since the US midterm elections have just been completed, neither the "lame duck" Congress, which has only one month left, nor the next Congress where the Republican Party controls the House of Representatives, there is no motivation to promote new legislation.

Liu Bin, a researcher at the National Institute of Opening-up at the University of International Business and Economics and a WTO research expert, pointed out to the reporter of " Daily Economic News " that the EU still has an option, which is to appeal through the WTO. "The US policy definitely violates the WTO's trade rules, especially the principle of national treatment for , because it treats domestic products differently from imported products."

However, there are questions about the effectiveness of the WTO mechanism. The WTO's dispute settlement mechanism usually takes years to handle a dispute. Even if Europe wins, the United States can appeal the results to the WTO's appellate body, which means that the WTO's decision cannot substantially bind the United States. The dialogue between

is not good, and Europe has long been prepared for both. Before visiting the United States, Macron proposed the "Buy European" initiative, hoping to subsidize European companies in a way similar to that of the United States and show a tough stance. There has been no consensus within the EU, and some worrying voices believe that this may lead to a new round of trade war between the United States and Europe. Previously, the two sides had been in a dispute over the subsidies of Airbus and Boeing for nearly two decades.

Liu Bin told the reporter of the Economic News that the EU may eventually subsidize its own companies on the one hand, and appeal to the WTO on the other hand. When subsidizing local European companies, potential disputes may be avoided with exceptions allowed by the WTO such as environmental protection and national security. "The two sides need to jointly respond to the Russian-Ukrainian conflict, so the possibility of serious conflicts on trade issues is relatively low. However, in any case, the subsidy policy will violate the principle of comparative advantages in international trade , and ultimately lead to a decrease in the efficiency of global production division of labor."

In addition to Macron's state visit, Europe and the United States also held several negotiations on the subsidy policy through a dialogue mechanism called "Trade and Technical Committee". But the feedback from Europe is that the United States does not have an appropriate feeling about Europe's concerns, but is constantly emphasizing the opportunities of European companies in the United States.

The next "Trade and Technical Committee" summit dialogue will be held at the University of Maryland in the United States on December 5, but the European side is already quite pessimistic about the results of the talks. On December 1, Thierry Breton, a senior EU official and internal market committee member, announced his withdrawal from the summit because the meeting schedule simply did not have enough time to discuss Europe's main concerns. The Inflation Cuts Act changed from one of the agendas to a 45-minute lunch conversation.

Manufacturing industry flows to the United States on a large scale and is flowing to Germany and France: We will do our best to defend the European economy

0 The above Northvolt situation represents the choices faced by European companies. Since the outbreak of the Russian-Ukrainian conflict, European energy prices have soared, and many European companies have turned their attention to the United States, where energy prices are more stable and cheaper. After the introduction of the Inflation Reduction Act, the United States encouraged the development of local electric vehicles and clean energy industry chain with high subsidies. European companies must transfer production lines if they want to obtain subsidies. Under the attack of multiple factors, many experts have warned that Europe may face a new wave of " de-industrialization ".

This concern makes the EU's perception of the United States even more negative."The fact is, if you look at this issue clearly, you will find that the most benefit from the conflict is the United States, because they export more gas at high prices and sell more weapons," a senior European official complained to Politico, a US political news network. Data shows that the United States has become the main source of natural gas imports in Europe, but Europe pays four times the price that is mainland China.

After the introduction of the Inflation Reduction Act, this feeling of "being pricked" was pushed to a new level because the impact on European allies when the United States formulated its policies was not considered.

Image source: Xinhua News Agency reporter Shan Weiyi Photo

"The domestic policy pursued by the United States is a kind of protectionism, which has discriminated against its allies, which is regrettable," said Tonino Picula, a member of the European Parliament for the trans Atlantic relations. Another EU diplomat is even more blunt: "The Inflation Reduction Act changes everything. Is the United States still our ally?" he told Politico.

html The Inflation Reduction Act passed in August has little to do with inflation. In fact, the Biden administration hopes to promote the development of electric vehicles, clean energy and other fields in the United States with subsidies of up to $370 billion and tax exemption.

This bill reflects the intention of favoring local enterprises and promoting the return of manufacturing to the United States. Taking the $50 billion subsidy for electric vehicles as an example, if the middle- and low-income groups want to obtain a maximum of $7,500 in car purchase subsidy, the purchased electric vehicles must be manufactured in the United States. Subsidy conditions even make strict requirements on the proportion of key mineral raw materials and battery modules. To meet these requirements, car companies must build local U.S. production capacity and adjust the source of supply chains.

According to the French government's calculations, after the implementation of the Inflation Reduction Act, the investment that France can attract will be reduced by 10 billion euros and the number of new jobs will be reduced by 10,000. Although France's Renault and Strattis (including the logo Citroen) do not export electric vehicles to the United States, the subsidy terms will affect French parts suppliers.

Germany also made "harsh words" to the United States. On November 29, local time, German Federal Deputy Prime Minister and Minister of Economic and Climate Protection Habek said that the EU will make a "strong response" to the US "Inflation Reduction Act", and the EU will also prepare for a trade conflict with the United States. "We will not let Germany lose its position as an industrial base."

In fact, France and Germany have reached a united front on the issue of US subsidies. On November 22, the two countries issued a joint statement, with French Minister of Economic Affairs Bruno Le Maire saying that Europe must make defending its own interests a priority. If no "compromise" is reached between the EU and the United States, France and Germany will do their best to defend the European economy.

Reporter|Li Menglin Editor|Gao Han He Xiaotao Dubo

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