Wed, 01 Feb 2023

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- Before Macron arrived in Washington, French officials have reportedly said their leader would confront U.S. President Joe Biden over the subsidies contained in the U.S. Inflation Reduction Act (IRA).

- The energy disputes, together with the IRA, will only, as Macron said, "fragment the West, because they create such differences between the United States of America and Europe."

PARIS/WASHINGTON, Dec. 2 (Xinhua) -- As Washington has been grappling with its inflation pressure by hiking up rates and rolling out trade subsidies, European countries have complained about the ally's selfish policies amid ongoing energy crisis and price hikes no less than that in the United States.

Though French President Emmanuel Macron's three-day visit to the United States was reported to soothe the cross-Atlantic spats over trade issues, the European-U.S. tensions are actually neither fresh nor limited to trade sector. Their disputes seem to last, waiting for one side to budge.


MACRON'S DISCONTENT

Before Macron arrived in Washington on Tuesday for his second trip to the United States since taking office in 2017, French officials have reportedly said their leader would confront U.S. President Joe Biden over the subsidies contained in the U.S. Inflation Reduction Act (IRA).

In August, the U.S. Congress passed the IRA, most of whose funds will be earmarked as subsidies for energy and climate programs, which have fueled a green energy investment rush by European companies in the United States.

Upset by the capital outflow and other possible spillover effects, the Europeans fear the act could upend the "level playing field" on trade between Europe and the United States.

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Paris has been worried for weeks about high energy prices for European competitiveness, French economy newspaper Les Echos said, but even more about the collateral effects in Europe of the industrial policy led by Washington.

During a joint press conference following the bilateral meeting with Biden, Macron highlighted what he said is a "fact" that industrial subsidies put forward by the IRA will kill ongoing projects that the European Union (EU) rolled out to accelerate energy transition.

"As a matter of fact, projects that were growing -- being developed in Europe, there's such a difference in subsidies that these projects might come to an end," he said.

It was not the first time for the French president to criticize publicly the IRA during his visit.

On Wednesday, Macron told a bipartisan group of U.S. lawmakers during a luncheon at the Library of Congress that the IRA is "super aggressive for our business people."

He wanted "to be respected as a good friend," Macron said, adding that Washington prioritizing domestic industries through the IRA will "kill a lot of jobs" in Europe, and it may "perhaps fix your issue but you will increase my problem."


U.S. HARDLY BUDGE

Recognizing the potential rivalry, France will plead not to become a collateral victim of American protective measures.

"What we want to avoid is less the capture of markets by the Americans to the detriment of the Europeans than, basically, the repatriation of American investments from Europe to the United States or the reconsideration of American investments in Europe and France," said the French presidential office Elysee Palace.

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However, for his part, Biden told reporters that the United States "makes no apology" for enacting the IRA.

Admitting that "there's obviously going to be glitches" in legislation as "massive" as the IRA, the U.S. president said, "there're tweaks that we can make that can fundamentally make it easier for European countries to participate and/or be on their own."

But he only mentioned possible "adjustments" to facilitate "the participation of European countries," without going so far as to speak of exemptions.

Les Echos said Paris has no illusions about the abandonment of American protectionism, because Biden was elected on an economic policy aimed at creating "well-paid industrial jobs" and he has been implementing it.

Clay Ramsay, a researcher at the Center for International and Security Studies at the University of Maryland, told Xinhua in an interview that U.S.-EU tensions arising from the IRA cannot be viewed just as "a spat."

Ramsay said the source can be traced to the Biden administration's National Security Strategy document.

Both the legislation and the document made it clear that the Biden administration will try to "build up a U.S. manufacturing base", said the scholar, adding that the EU -- if lacking actions on its own -- may potentially be left in a disadvantageous position in the U.S. market.


MORE DISPUTES ONGOING

For the past few months, European countries, especially France and Germany, have been furious about the prices of imported liquefied natural gas (LNG) from the United States.

Speaking to the French National Assembly in October, France's Minister of Economy and Finance Bruno Le Maire said the United States sells its LNG to Europe at "four times" the price at which it sells to American suppliers.

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According to the International Energy Agency (IEA), in 2021 the EU imported 155 billion cubic meters of natural gas from Russia, accounting for around 45 percent of EU gas imports.

Since sanctions against Russia were imposed, the EU has turned to the United States for LNG supplies.

Le Maire said he feared the United States could benefit from the situation to the detriment of European interests.

He insisted on the need to build "economic relations that are more balanced on the energy issue between our American allies and the European continent."

Le Maire's remarks came just days after Macron expressed his dissatisfaction over LNG imported from the United States and Norway.

"We are going to say with great friendship towards our American friends, our Norwegian friends, that 'you are great, you provide us with gas.' But there is one thing that can't work for a very long time, that is we can't pay for gas that is four times more expensive," Macron said.

Germany's Minister for Economic Affairs and Climate Action Robert Habeck also criticized the "excessive" gas prices charged by "friendly" supplier countries, such as the United States.

"Some countries are charging astronomical prices in some cases. Of course, this brings problems that we must talk about," Habeck told the Neue Osnabruecker Zeitung newspaper.

The energy disputes, together with the IRA, will only, as Macron said, "fragment the West, because they create such differences between the United States of America and Europe."

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