EU Hopes to Resolve Disagreements With US Stemming From Inflation Reduction Act: Michel

MOSCOW (Sputnik) - The European Union is hoping for a positive outcome on dialogue concerning the US Inflation Reduction Act (IRA), which is a point of disagreement between the bloc and the United States, European Council President Charles Michel said on Wednesday.

"We sincerely hope the dialogue with American friends will lead to concrete positive results. Let's be clear, in my opinion, European companies must be able to benefit from the same conditions as Canadian and Mexican companies. But dear colleagues, we must look reality squarely in the face. Our American ally is embracing a massive state aid policy and China continues to invest state money in its technology sector," Michel said at a plenary session of the European Parliament.

The European Council president noted that the EU and the US were close allies but even allies have differences, which is the case with the IRA.

Michel emphasized that the bloc must act to show European industry and citizens that the EU is "up to the challenge."

"The EU has helped to build a global system based on free trade, while striving to ensure a level playing field. But we cannot stand idly by as our main competitors embrace policies of massive economic support for their companies. We must therefore mobilize massive resources to drive forward an ambitious European industrial policy to boost competitiveness, to turbo-charge productivity, and to spur investment," the European Council's president said.

The IRA, signed into law by US President Joe Biden in August 2022, commits $300 billion toward deficit reduction, in addition to providing approximately $370 billion in funding for energy security, including tax credits for US-made electric vehicles and subsidies to US consumers, and $80 billion to increase Internal Revenue Service tax enforcement and operations.

Concerns are rising in Europe that the US tax credit plan could kick off a subsidy race between the transatlantic allies at a time when they want to show unity in the face of the Ukraine conflict.