EU should work with others to make world flatter: China Daily editorial

While officials from the United States and the European Union reportedly touched on other issues such as the spillover effects from the conflict between Russia and Ukraine and a "joint road map" to assess trustworthy artificial intelligence technologies, it was the US' Inflation Reduction Act that dominated their trade discussions on Monday.

The act, designed to accelerate the US transition to a low-carbon economy, contains around $370 billion in subsidies for the green energy industry in the US, as well as tax breaks for US-made electric cars and batteries. This has had the EU up in arms. It says the act is "distortive" and that it will be forced to take action "to rebalance the playing field".

Monday's meeting of the US-EU Trade and Technology Council, the third such talks, was part of a push to resolve the dispute and "to grow the bilateral trade and investment relationship", according to a statement from the US National Security Council.

But that looks far-fetched given the EU's concerns that the subsidies are a "job killer" and it will effectively decimate the green industries in Europe.

The EU initiatives on the transition to a green and digital economy have made European industries more competitive, but that competitiveness will essentially be wiped out by the US subsidies.

EU Internal Market Commissioner Thierry Breton did not even take part in the meetings, stating that they did not give enough space to issues of concern to many European industry ministers and businesses.

Breton has threatened to take the matter to the World Trade Organization and take retaliatory measures if the United States does not drop the subsidies. The US has offered some olive branches. But asked about the potential "tweaks" to the act that US President Joe Biden mentioned as a possibility last week, a European official involved in the talks dismissed them on Monday, saying that the assessment was they would be "extremely difficult" to realize.

And although the EU's trade commissioner Valdis Dombrovskis said after the meeting, that the EU was leaving it "slightly more optimistic" than it was on entering it, the EU should be aware that the US will expect a price to be paid for any concessions.

The EU should look at the bigger picture. The world is made up of more countries and regions than the US and the EU, and if the two giants adopt subsidy policies that will only make it more difficult for the rest of the world.

The EU should be working with other economies to make the world flatter for the benefit of all, not competing with the US to see which of them can build the biggest wall.