German economy ministry calls for EU’s joint response to US inflation law

© Reuters. FILE PHOTO: The pieces seen in front of the US and EU flags are shown in this illustration taken January 25, 2022. REUTERS/Dado Ruvic/Illustration

BERLIN (Reuters) – Germany wants a common European response to the US Inflation Reduction Act that involves simplifying rules on state support and expanding funding opportunities, according to a report. a document from the German economy ministry seen by Reuters on Friday.

The European Union could establish a program to promote green technology by combining different funding elements to avoid budget constraints: For example, the Innovation Fund could increase support for projects large scale in clean technology or the European Investment Bank (EIB) could take on more risk through underwriting, it said.

The ministry document also suggests member states could more firmly anchor sustainability criteria in public tenders at the national level as well as expand or increase traditional subsidy schemes, but warns against local content requirements in favor of domestic industry.

These, according to the document, are not only likely to conflict with World Trade Organization (WTO) law, but also contribute to “further erosion of the world trade order”.

While the European Union countries welcome Washington’s investment in green technology, they argue that the US subsidy of 200 billion euros ($207 billion) is tied to domestically produced content. may violate WTO rules to the detriment of their companies.

The EU and Washington have formed a joint task force in the hope of settling a dispute over the $430 billion law.

(This story has been corrected to establish that the document is from the Economy Department, not the Treasury Department; and to clarify in the title that the Department calls for, not offers, a general response. )

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