![The EU remains concerned about the US Inflation Reduction Act, says trade commissioner](https://image.cnbcfm.com/api/v1/image/107181613-1674207945076-1674112011-27793161008-hd.jpg?v=1674207955&w=750&h=422&vtcrop=y)
The European Union still believes President Joe Biden’s Inflation Reduction Act discriminates against firms in the bloc, the top commerce minister said on Thursday.
Nevertheless, Valdis Dombrovskis told CNBC that the EU is engaged in ongoing negotiations with US officials which have to date addressed just some of its concerns. He noted that he met U.S. Trade Representative Katherine Tai two days ago, in a gathering where the two pledged to step up their engagement on key issues, including electric vehicle subsidies.
“Our concerns relate to the discriminatory measures in [the] the US Inflation Reduction Act, which discriminates against EU firms,” he said in an interview at the World Economic Forum in Davos, Switzerland.
“We consider we must always tackle climate change and the green transition together by constructing transatlantic value chains, not tearing them apart.”
The IRA was approved by lawmakers in August and features a record $369 billion in spending on climate and energy policies. This has drawn swift criticism from EU member states, who consider lots of its provisions – including green subsidies similar to tax credits for North American-made electric cars – threaten European industry.
Asked by CNBC’s Geoff Cutmore if there was a risk of the dispute escalating right into a trade war, Dombrovskis said: “Without delay we’re specializing in negotiated solutions, we’re reaching out to the US authorities at various levels.”
![Belgium Prime Minister: The EU is not catching up in the development of sustainable industry](https://image.cnbcfm.com/api/v1/image/107180233-16740509091674050907-27780561403-1080pnbcnews.jpg?v=1674051689&w=750&h=422&vtcrop=y)
“We now have a special EU-US task force that continues its work. We have made some progress, a few of our concerns have been addressed, but there are still issues to be addressed.”
On what the EU’s response can be if it weren’t satisfied with the end result of the negotiations, Dombrovskis said that now “it is not about saber-rattling”.
He added that the bloc is working on a broader economic policy response to competitiveness issues, given the challenges of high energy prices and the war in Ukraine, in addition to the IRA.
That is to incorporate a review of existing EU grants and funds and whether or not they are getting used most effectively.
![Greek finance minister: We expect a much stronger 2023](https://image.cnbcfm.com/api/v1/image/107180407-S-CHRISTOS-CC-011823.jpg?v=1674061683&w=750&h=422&vtcrop=y)
Dombrovskis also said they wish to adapt the EU’s strict state aid rules to permit member states to provide more support to firms helping with the green transition, as previously called for by European Commission President Ursula von der Leyen.
“But after all we want to plan this fastidiously to take care of a level playing field in the EU’s single market,” Dombrovskis said.
Ireland’s Finance Minister Michael McGrath told CNBC on Wednesday that the EU desired to avoid a “subsidy race” with the US and that any changes to state aid rules must not profit countries with “the means and resources” to offer more support to firms than others.
Meanwhile, Spanish Prime Minister Pedro Sanchez said on Monday that the EU could learn lessons from the IRA.
“We’d like to reform some internal elements of our industrial policy, similar to state aid, cutting red tape and attempting to send a message to industry around the world that Europe and after all Spain is a superb place to locate,” he added.
— Silvia Amaro of CNBC contributed to this text.