EU’s Dombrovskis to visit U.S. for talks on Inflation Reduction Act

European Commission Vice President Valdis Dombrovskis will head to Washington next month for more talks about the U.S. Inflation Reduction Act (IRA), he said, adding that discussions are unlikely to solve all the EU’s concerns about the law.

Dombrovskis, the European Union’s commissioner for trade, said progress was being made in some areas of the discussions.

EU countries fear the U.S. legislation’s $369 billion of subsidies for electric vehicles and other clean technologies could put companies based in Europe at a disadvantage.

The subsidies, largely for manufacturers based in North America, have local content requirements that EU leaders fear may lure companies away from Europe.

“I am planning to go to Washington D.C. in early March to discuss the issues related to the Inflation Reduction Act,” Dombrovskis said on Thursday while in the Bulgarian capital Sofia.

“The U.S. has indicated openness to find ways how to treat us as a free trade agreement equivalent partner,” he said.

Through a taskforce set up between the two sides “we will be able to solve some of our problems with the IRA but not all of our problems”, he said.
He said a broad definition of commercial vehicles was one area in which progress was made.

“Commercial vehicles are not subject to the discriminatory provisions as it includes also leased cars to private individuals, which leads us, I would say, to a half-way satisfactory solution for electric vehicles tax credits,” he said.

He added a deal could be reached on raw materials.

Dombrovskis met U.S. Trade Representative Katherine Tai last week on the margins of the Munich Security Conference.

The EU wants the same treatment as U.S. trade partners Canada and Mexico, whose production is largely included in the subsidy schemes but any revision of the act by the U.S. Congress is out of the question.

Some EU countries have warned the bloc against waging a subsidy race with the U.S.

European nations are not the only ones who have raised concerns about the U.S. legislation. South Korea has also sought talks with the U.S. over it.