France offers "Made in Europe" strategy against US Competition

World » EU | January 17, 2023, Tuesday // 10:42
Bulgaria: France offers "Made in Europe" strategy against US Competition Emmanuel Macron

France is proposing that the European Union soften its rules on state aid and financing for companies in response to the controversial subsidy program adopted by the United States, DPA reported, quoted by BTA.

French President Emmanuel Macron wants to simplify EU rules and procedures, especially for important initiatives of common European interest, as well as for state aid and new financial resources for investment.

US President Joe Biden signed in August the so-called Inflation Reduction Act that redirects billions of dollars to green energy and social justice investments.

According to the European Commission, the law puts European companies at a disadvantage compared to their American competitors. Europe fears that this could lead to the relocation of production and job losses. France has therefore been pushing for a strong pan-European response for some time.

The French government has indicated that it awaits the European Commission's proposals on the matter before the next EU summit, which is scheduled for early February.

Part of the "Made in Europe" strategy, according to Macron, will be a new sovereign fund that will provide the necessary financing for all European countries, the German newspaper "Handelsblatt" reports. The idea envisages using funds from existing European funds, such as the recovery funds after the COVID pandemic, to be redirected to the project.

Paris also offers a fiscal instrument that could pave the way for pan-European lending.

France's goal is to restructure the EU's industrial policy in order to reduce dependence in key sectors, Politico adds.

Four pillars

Reuters notes that European leaders will discuss such an industry policy at a Feb. 9-10 summit in Brussels, worried that Washington's $369 billion inflation-busting law, which subsidizes a range of products from batteries to electric cars, solar panels and wind turbines - will drive companies away from the EU.

"The implementation of an ambitious and strong European industrial policy is essential today. French authorities are proposing that it take the form of a 'Made in Europe' strategy," France said in a document seen by Reuters.

It called for urgent measures, in particular to retain European companies involved in solar panels, batteries, hydrogen and critical raw materials, and noted that the "Made in Europe" strategy should be based on four pillars.

The first will include EU targets to reduce dependence on external suppliers and set production targets by 2030 in key sectors that will be regulated by EU law, as the semiconductor bloc did with the Chip Act.

The EU will also need to simplify and speed up the issuing of permits for the installation of new production sites and reform its energy market to ensure that European industries have access to energy at an affordable price, the document said.

The second pillar implies an urgent change to EU rules on the aid that governments can give to companies, so that emergency state aid to companies, already authorized during the COVID-19 pandemic, can continue for targeted sectors on a temporary basis.

State aid and funding from the EU

State aid can be in the form of subsidies or tax credits, the document says.

The third pillar should be EU funding for sensitive sectors, which would help to equalize uneven fiscal powers to support industries between EU countries. This could take the form of a fund that would use joint and therefore cheap loans from the EU, which would then be transferred as cheap loans to individual countries.

Paris is also proposing the creation of an "emergency fund" to redirect money the EU has already agreed to raise for other purposes to help the EU invest in strategic projects for European industry on top of national state aid.

Finally, the EU must create by the end of 2023 a new "sovereign fund" that will take over the functions of the emergency fund and will target sensitive sectors.

The final pillar of the strategy will be a fully mobilized trade policy, including recent trade defense instruments, the document noted.

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Tags: France, US, europe, Macron
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