PanamaTimes

Monday, May 20, 2024

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

PanamaTimes
0:00
0:00
Close
El Salvador's Bitcoin Holdings Reach $350 Million
Teens Forming Friendships with AI Chatbots
WhatsApp Rolls Out Major Redesign
Neuralink's First Brain Implant Experiences Issue
Apple Unveils New iPad Pro with M4 Chip, Misleading AI Claims
OpenAI to Announce Google Search Competitor
Apple Apologizes for Controversial iPad Pro Ad Featuring Instrument Destruction
German politician of the AFD party, Marie-Thérèse Kaiser was just convicted & fined $6,000+
Changpeng Zhao Sentenced to Four Months in Jail
Biden Administration to Relax Marijuana Regulations
101-Year-Old Woman Mistaken for a Baby by American Airlines: Comical Mix-Up during Flight Check-in
King Charles and Camilla enjoying the Inuit voice singing performance in Canada.
New Study: Vaping May Lower Fertility in Women Trying to Get Pregnant
U.S. DOJ Seeks Three-Year Sentence for Binance Founder Changpeng Zhao
Headlines - Thursday, 23 April 2024
Illinois Woman Wins $45M Lawsuit Against Johnson & Johnson and Kenvue for Mesothelioma Linked to Baby Powder
Panama's lates news for Friday, April 19
Creative menu of a Pizza restaurant..
You can be a very successful player, but a player with character is another level!
Experience the Future of Dining: My Visit to an AI-Powered Burger Joint
Stabbing rampage terror attack in Sydney, at least four people killed, early reports that a baby was among those stabbed.
Iran fired more than 300 drones and missiles at Israel overnight. Israel Reports Light Damage After Iran Launches Large Strike.
I will never get enough of his videos and the pure joy and beauty of these women!!
Scientists at the University of Maryland have developed an "invisibility cloak", for AI using adversarial patterns on a sweater, making the wearer nearly undetectable to standard object detection methods.
Lamborghini Bids Farewell to Its Best-Selling Sports Car: The Huracán
Sam Bankman-Fried Appeals 25-Year Prison Sentence for $8bn FTX Fraud
OJ Simpson, ex-NFL star who was acquitted of murder, dies aged 76
British Backpacker Imprisoned in Notorious Bolivian Prison: Family Raises Funds for Legal Fight and Essentials
Argentina: Venezuela Cuts Power to Embassy after Opposition Meeting
El Salvador Offers 5,000 Passports to Skilled Foreign Workers: Tax-Free Relocation and Citizenship
Panama Papers Trial Begins: Founders of Mossack Fonseca Face Money-Laundering Charges
75 Becomes the New 65: Retiring in Your 60s Unrealistic as Life Expectancy Increases and Costs Rise
Total Solar Eclipse of 2021: 32 Million Witness the Mystical, $1.5bn Spectacle Sweep Across North America
New shopping experience…
New world, new reality, let’s get used to it
UK Company Passes Milestone in Developing Space-Based Solar Power, Aiming to Power a Million Homes and Provide Constant Energy
Mexico Breaks Diplomatic Ties with Ecuador after Police Storm Embassy, Arrest Former Vice President
Monty Python were so ahead of their time
If there's a will, there's a way!
Rules about how to dress are important, but not so much if you have a lot of money.
Body Armor Firm Showcases Stab-Proof Vest in Demo on CEO
Mexico Cuts Diplomatic Ties with Ecuador After Embassy Stormed in Quito
Here is a tattoo idea, for engineers
Zoraya Ter Beek, a 28-year-old woman from the Netherlands, will undergo euthanasia in May due to severe mental health challenges
Here's a video featuring Fidel Castro, where he discusses his stance against war and his commitment to preserving life, positions that have put him at odds with the USA:
Woman reaches behind and steals gun from a security guard and shoots three people while getting detained in Chile
Take a walk around the safe and thriving downtown San Salvador.
Joe Biden criticised by Trump campaign for declaring Transgender Day of Visibility on Easter Sunday
Macron says France will help Brazil develop nuclear-powered submarines
A video demonstrating women's self defense class in 1930
×