Monday, January 30, 2023

Borrell: US law is not against inflation, but a “big boost” to subsidies

The US Inflation Reduction Act “has little to do” with combating this problem and is really a “big boost” to subsidies to companies in that country that creates a “competitive gap”, denounced the high representative of the European Union (EU) for Foreign Affairs, Josep Borrell.

This law “is a job creation machine giving money to US companies” and goes against the rules of the World Trade Organization (WTO), Borrell said in Madrid during the debate “A new world order: politics, economy and global issues such as tools to face current challenges”, organized by IE University.

According to Borrell, there is currently a great debate within the EU on how to respond to this law, which Brussels considers discriminatory for European companies due to the multi-million dollar subsidies it provides for green technology produced in the United States.

If you get into “a war over who subsidizes the most, let’s forget about globalization,” warned the head of community diplomacy.

A working group was created last year to discuss European concerns about the Inflation Reduction Law, which have also been addressed this week in Brussels at a meeting of the Executive Vice President of the European Commission (EC) and head of Trade, Valdis Dombrovskis, with the United States Trade Representative, Katherine Tai.

In addition, from the World Economic Forum in Davos (Switzerland), the president of the EC, Ursula von der Leyen, outlined on Tuesday a plan to boost the clean technology industry and European competitiveness against US or Chinese subsidies.

On the other hand, Borrell referred to the slowdown in global growth and the uncertainty about how inflation will evolve, warning of the risks of a “debt crisis” in some developing countries, an increase in inequality and a slowdown in poverty reduction.

The “big lender” today is China, which has become “the world’s bank”, and one must wonder, in his opinion, how that country would react “in the face of a new debt crisis”.

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