TIMES.KY

Cayman Islands, Caribbeanand International News
Monday, Mar 20, 2023

Berlin warms to France’s ‘Buy European’ plans as global trade rules erode

Berlin warms to France’s ‘Buy European’ plans as global trade rules erode

Germany fears losing industrial champions because of unfair competition from state-backed US and Chinese rivals.

Threatened by a new U.S. subsidy package that could hammer EU industry, Germany is rowing back on its long-standing objections to schemes like France's "Buy European Act" that would set provisions on buying goods locally.

Berlin's increasing sympathy for the French approach is a stark sign that Germany fears the traditional trade order is melting, as Washington follows China's lead with massive state support for industry. As one of the EU's more commercially liberal nations, Germany has generally opposed French proposals for interventionist industrial strategy, reckoning such measures would break free-trade taboos.

The calculus is now changing, however, ahead of a gathering of EU trade ministers in Brussels on Friday and a meeting between German Chancellor Olaf Scholz and French Prime Minister Elisabeth Borne in Berlin.

America's Inflation Reduction Act, which grants $369 billion worth of subsidies and tax breaks to U.S. green businesses, will be high on the agenda of both meetings. EU countries fear that the U.S. law will suck investment out of Europe, and are fuming about discriminatory provisions that encourage consumers to "Buy American" when it comes to purchasing an electric vehicle.

With the time for peace talks with the U.S. running out amid little hope of an agreement, German officials are now open talking about not only funneling billions of state subsidies into key green technologies like batteries, wind power or hydrogen, but also creating controversial requirements that would, at least to a certain extent, privilege European production.

German Economy Minister Robert Habeck said Thursday that the EU needed a "strong answer" to the U.S. law, telling German daily Handelsblatt that this would involve faster approvals of state aid decisions by the European Commission, more subsidies and also "procurement of local products."

The latter point is crucial, as it edges toward a "Buy European Act" that French President Emmanuel Macron has been calling for, which would give preferences to the use of European components in crucial industries, similar to those the U.S. law offers to American products. However, it's likely to antagonize other trading partners as they would be disadvantaged.

While such local content provisions might help the EU to avoid an exodus of key industries and ensure that the bloc stays in the race to produce next-generation green technologies, including electric vehicles, they are seen as a sacrilege in the international trading system.


German Economy Minister Robert Habeck and Chancellor Olf Scholz, pictured November 23 2022

"The question of local content is very tricky, because it’s by definition very much against the core of World Trade Organization (WTO) rules, which is no discrimination against foreign companies," said Elvire Fabry, a senior research fellow at the Institut Jacques Delors.

Fabry warned that the EU "risks crossing the Rubicon" and losing its credibility as a custodian of global trading rules, on which the EU depends much more than the U.S. because of its high share of foreign trade.

Speaking at an economics summit in Berlin on Wednesday, Habeck accepted that the EU's actions should remain in line with multilateral trading rules "if possible," but also warned that, faced with unfair trading practices by the U.S. and China, it was not enough to just "criticize and complain."

Habeck said that local content requirements had long been "unfamiliar" to the EU, but stressed that Europe had already taken such a path in the field of microchip production.

He suggested that such a measure might qualify for an exemption under global trading rules as long as the EU can prove that it's not about creating "national" advantages but instead about "the strategic need for sovereignty, also in the area of energy policy."

Newsletter

Related Articles

TIMES.KY
Close
0:00
0:00
Home Secretary Suella Braverman tours potential migrant housing in Rwanda as asylum deal remains mired in legal challenges
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
Credit Suisse to borrow $54 billion from Swiss central bank
Russian Hackers Preparing New Cyber Assault Against Ukraine
Jeremy Hunt insists his Budget will get young parents and over-50s back into work
If this was in Tehran, Moscow or Hong Kong
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
Mexican President Claims Mexico is Safer than the U.S.
A brief banking situation report
Lady bites police officer and gets instantly reaction
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
BBC Director General, Tim Davie, has apologized, but not resigned, yet, following the disruption of sports programmes over the weekend
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
Senator Tom Cotton: If the Mexican Government Won’t Stop Cartels from Killing Americans, Then U.S. Government Should
Banking regulators close SVB, the largest bank failure since the financial crisis
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
It's the question on everyone's lips: could a four-day workweek be the future of employment?
Is Gold the Ultimate Safe Haven Asset in Times of Uncertainty?
Spain officials quit over trains that were too wide for tunnels...
Don Lemon, a CNN anchor, has provided a list of five areas that he believes the black community needs to address.
Hello. Here is our news digest from London.
Corruption and Influence Buying Uncovered in International Mainstream Media: Investigation Reveals Growing Disinformation Mercenaries
Givenchy Store in New York Robbed of $50,000 in Merchandise
European MP Clare Daly condemns US attack on Nord Stream
Former U.S. President Carter will spend his remaining time at home and receive hospice care instead of medication
Tucker Carlson called Trump a 'demonic force'
US Joins 15 NATO Nations in Largest Space Data Collection Initiative in History
White House: No ETs over the United States
U.S. Jet Shoots Down Flying Object Over Canada
Being a Tiktoker might be expensive…
SpaceX, the private space exploration company, made a significant breakthrough in their mission to reach space.
China's top tech firms, including Alibaba, Tencent, Baidu, NetEase, and JD.com, are developing their own versions of Open AI's AI-powered chatbot, ChatGPT
This shocking picture, showing how terrible is the results of the earthquake in Turkey
President Joe Biden delivered the 2023 State of the Union Address , in order to help Americans that missed the 2022 speech, do not have internet, and suffer from short memory.
The desk of King Carlos Alberto of Sardinia has many secret compartments
Today's news from Britain - 9th February 2023
The five largest oil companies in the West generated combined profits of nearly $200 billion in 2022, which has led to increased calls for governments to impose tougher windfall taxes
2 earthquakes in Turkey killed over 2,300 people
Powerful Earthquake Strikes Turkey and Syria, Killing More Than 1,300 People.
Turkish photographer Ugur Gallenkus portrays two different worlds within a single image. Brilliant work
×