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France and Germany Unveil Their Plan for Countering U.S. Green Industry Subsidies

MIN READDec 20, 2022 | 18:39 GMT

French Economy and Finance Minister Bruno Le Maire (left) talks with German Finance Minister Christian Lindner (right) before a Eurogroup meeting in Luxembourg on Oct. 3, 2022.

French Economy and Finance Minister Bruno Le Maire (left) talks with German Finance Minister Christian Lindner (right) before a Eurogroup meeting in Luxembourg on Oct. 3, 2022.

(Thierry Monasse/Getty Images)

France and Germany's proposed plan to counter the U.S. Inflation Reduction Act (IRA) by unlocking additional intra-EU state aid is unlikely to drastically reduce the risk of companies leaving Europe due to high energy prices and, if unmatched by dedicated EU funds, could lead to distortions in the EU single market. On Dec. 19, France and Germany issued a joint statement outlining their strategy for how to react to the U.S. IRA, which introduces $369 billion worth of tax cuts and other benefits for green technologies (like electric vehicles) that are made in the United States. The Franco-German strategy has two parts. On the one hand, Paris and Berlin are urging the White House to extend the IRA's benefits to European companies (similar to what the United States does for Canadian and Mexican companies); and on the other, they're calling on Brussels to develop its own ''green industrial policy.'' Notably,...

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