Let’s finally step up for Europe’s competitiveness!

This week, the European Parliament’s plenary session debated the so-called US Inflation Reduction Act, which will give tax breaks and subsidies to green investments, such as electric cars and battery manufacturers, in the US starting in January 2023 while excluding European companies from the benefits. In her speech, Fidesz MEP Enikő Győri, said: “We are allies but also economic competitors. The leaders of the EU should also finally realise: the energy crisis, sanctions, and US economic policy are all damaging our competitiveness.”

MEP Enikő Győri pointed out, “It is obvious that the US will not change the act. Our options are limited if we do not want a trade war. Litigating at the WTO is time-consuming, and by the time, we have a legal remedy, companies will have already relocated to the US. Furthermore, national subsidies would create an uneven playing field between richer and poorer countries within the EU.”

Instead, the MEP proposed that the EU helps the European companies: “Let’s conclude the pending free trade agreements and rethink the EU’s state aid system. Instead of cumbersome and slow procedures, we need an investment-friendly environment. We also need to get rid of our own red tape-increasing legislation that is strangling small and medium-sized enterprises.” Finally, she called on the Commission not to create a fund for industrial renewal at the cost of debt.

Background: The Inflation Reduction Act is a clearly protectionist environmental and social reform program of the US government. It aims to protect US industry, stimulate its economy, and help companies implement the energy transition. It includes tax breaks for electric cars and batteries made in the US. This would draw investment away from Europe, exacerbating the economic crisis in the EU.