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EU, US to 'immediately' start work on green subsidies deal

March 10, 2023

US President Joe Biden and European Commission President Ursula von der Leyen touted a breakthrough in their trans-Atlantic trade dispute over subsidies for the green economy, as well as the war in Ukraine.

US President Joe Biden meets with President of the European Commission Ursula von der Leyen in the Oval Office of the White House
Joe Biden and Ursula von der Leyen are trying to resolve the transatlantic trade disputeImage: Sarah Silbiger/REUTERS

US President Joe Biden and European Commission President Ursula von der Leyen on Friday agreed to start negotiations that could allow European raw materials to be used as part of an American clean energy spending spree.

Biden and von der Leyen met at the White House against a backdrop of European complaints that clean energy subsidies in the US Inflation Reduction Act and other bills will divert investment away from Europe and hurt their economies.

"We intend to immediately begin negotiations on a targeted critical minerals agreement for the purpose of enabling relevant critical minerals extracted or processed in the European Union" to qualify for the IRA stimulus plan, the two leaders said in a joint statement. 

Speaking to the media, Von der Leyen said her goal was to make sure raw materials producers in the EU could export their products to the US "as if they were sourced in the American market."

Meanwhile, the leaders said in their joint statement that the EU would make a similar concession for goods sourced in the US as part of its so-called European Green Deal. 

"Today, the United States and the European Commission announced the launch of the Clean Energy Incentives Dialogue to coordinate our respective incentive programs so that they are mutually reinforcing," they said. 

The war in Ukraine was also a major agenda item. The two leaders were expected to reaffirm their commitment to continuing to support Ukraine, as well as to discuss ways to strengthen cooperation on imposing sanctions on "third party actors" who are violating sanctions on Russia.

Partners and good friends

Speaking in the Oval Office at the start of the meeting, both Biden and von der Leyen underlined the strength of their partnership, and the unified support for Ukraine and efforts to hold Russia accountable for its invasion.

"We are not only partners, the European Union and the United States are good friends," von der Leyen said, highlighting US support for Europe in finding alternate energy supplies so EU members could reduce their dependence on Russian supplies.

She welcomed planned US investments in new and clean technologies, and said there were "plenty of topics" to discuss since Europe was also planning similar investments.

EU nerves frayed over US subsidy scheme: DW's Teri Schultz

IRA vs. European Green Deal

Tensions had been swirling in Europe over the Biden administration's landmark Inflation Reduction Act (IRA), a government spending spree championing US manufacturing in climate-friendly technologies.

Europe had been pushing for months for the US to consider a scheme whereby European materials would receive the same incentives as those made in the US, Canada or Mexico. 

Earlier this year, the European Commission presented its Green Deal Industrial Plan in response to the US measure, with increased levels of state aid to help Europe compete as a manufacturing hub for clean tech products.

Prior to the talks, German Chancellor Olaf Scholz had expressed optimism in a possible breakthrough, saying he understood there was a "good chance" of movement on the issue.

Although comparatively few details were outlined in Friday's announcement, the two sides appear to be planning to coordinate their discounts. 

zc, dh/msh (AFP, Reuters, dpa)