Huge subsidies exacerbate the risk of US-EU trade war?

(Financial World) Huge subsidies exacerbate the risk of US-EU trade war?

　　China News Agency, Beijing, December 6 (Reporter Li Xiaoyu) The dispute between the US and Europe caused by the US "Inflation Reduction Act" continues.

Scholars in Beijing believe that although the European manufacturing industry will be severely hit by the bill, it is unlikely that a trade war will break out between Europe and the United States.

　　According to foreign media reports, Lange, chairman of the International Trade Committee of the European Parliament, recently said that the US "Inflation Reduction Act" "obviously does not comply with WTO rules", and the EU should file a complaint against the bill to the WTO as soon as possible.

French Economy and Finance Minister Bruno Le Maire said that the best response to the bill is to have a European "Inflation Reduction Act", that is, to use simple, effective and large-scale subsidies to invest in European industries.

　　The EU is dissatisfied with the "Inflation Cutting Act" for good reason.

According to the bill, the United States will invest about US$430 billion in the next ten years to combat climate change, develop clean energy and strengthen medical security, including about US$370 billion in clean energy subsidies.

The bill stipulates that electric vehicles that meet the conditions of final assembly in North America and batteries mainly sourced from North America can receive a tax credit of $7,500.

　　This policy will allow electric vehicles produced in North America to gain a stronger price competitive advantage in the US market.

Sun Yanhong, director of the European Economic Research Office of the European Institute of the Chinese Academy of Social Sciences, said that the current EU is in deep energy crisis, manufacturing production and operation costs are high, and the trend of "de-industrialization" is accelerating.

The U.S. has launched a discriminatory huge subsidy policy, which will further encourage European manufacturing companies, especially electric vehicle companies, to transfer their supply chains to North America, exacerbate Europe’s “deindustrialization”, cause the loss of manufacturing jobs, and endanger Europe’s social stability and economy. Long-term development.

　　Wei Jianguo, the former vice minister of the Ministry of Commerce of China, also said that the EU's domestic manufacturing industry is mainly high-end manufacturing, while the US "Inflation Reduction Act" hits precisely this part of the "essence of manufacturing."

At the time of the current economic downturn in Europe, this will not only make the European economy "severely wounded", but may even make it difficult for the European economy to turn around in the next 5-10 years.

　　Europe and the United States are currently negotiating on the "Inflation Reduction Act", and the prospects of the negotiations are still unknown.

Although there are voices that the EU may take retaliatory measures if the negotiations fail, and even trigger a trade war between Europe and the United States, scholars point out that the countermeasures that the EU can take are actually quite limited.

　　In an interview with a reporter from China News Agency, Chen Fengying, former director of the Institute of World Economics at the China Institute of Contemporary International Relations, said that the current independence of the European Union has been significantly weakened by the Ukraine crisis. The beams are "unraveling one by one", so the possibility of a "showdown" between the EU and the United States is unlikely.

Even if negotiations fail, the EU "has few cards to play" to counter the US, such as imposing tariffs on certain US exports to Europe.

　　Sun Yanhong also said that the EU may take two countermeasures: at the multilateral level, through the WTO countervailing procedures, forcing the United States to correct its subsidy behavior to a certain extent; at the bilateral level, increasing import tariffs on electric vehicles produced in North America, Offset the unfair competition it caused in the European home market.

However, as the current crisis in Ukraine continues, the European Union, which relies on the United States on security issues, actually does not have the confidence to "openly challenge" the United States.

　　No matter which way the U.S.-EU rift over the bill goes, the cracks in the relationship between the two sides have already been created.

　　Chen Fengying said that as the crisis in Ukraine continues and the economic recovery gap between the US and Europe gradually widens, the contradictions between the two sides are becoming more prominent.

However, since the EU relies on the United States for security, this contradiction has not and will not worsen to the point of "breaking up" the two sides.

(Finish)