Germany, France seek to counter US climate aid with own plan

BERLIN (AP) — Germany and France on Monday backed calls to subsidize Europe’s green industries in a bid to counter financial aid that the United States has put in place for American manufacturers.

The European Union has warned of a possible trans-Atlantic trade war over the U.S. Inflation Reduction Act, a $369 billion plan that favors American-made products and the EU claims unfairly discriminates against its firms.

In a joint statement, Berlin and Paris said they want to “secure the industrial base in Europe, in particular critical green industries.”

German Economy Minister Robert Habeck and his French counterpart, Bruno Le Maire, suggested “targeted subsidies and tax-credits” for industrial sectors such as wind and solar power generation, heat pump manufacturing and hydrogen production.

At the same time, they urged the EU’s executive commission to negotiate with Washington for European manufacturers to get the same exemptions the U.S. grants to Mexico and Canada, which are free-trade partners.

Many of the ideas coming from the EU’s two biggest economies echo proposals by European Commission President Ursula von der Leyen, who wrote to European leaders last week saying the bloc should adjust its rules on state aid to achieve the “unprecedented transformation” from fossil fuels to green power.

Von der Leyen also said the EU should work with the United States to ensure “that our respective incentive programs reinforce each other,” such as by working together to find alternative sources of key raw materials currently supplied by China.

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