BRUSSELS (Reuters) -The European Union should not expect talks with the United States to resolve all the problems it sees in the U.S. Inflation Reduction Act and is not ruling out any potential response, EU trade chief Valdis Dombrovskis said on Thursday.
The EU argues that the $430 billion act, which grants consumers tax credits for U.S.-produced electric vehicles (EV) and other green products, could make the United States a world leader in the EV market at Europe’s expense.
The two sides have set up a task force to discuss the topic, with the EU seeking the same exemption Washington has granted to free trade agreement partners such as Canada, Mexico and Australia.
Dombrovskis told the European Parliament’s trade committee he expected the task force to report back next week and, in any case, before the end of the year when parts of the act enter force.
“And then we’ll see to which extent our concerns are taken into account,” he told lawmakers. “It will solve some of our problems, it will not solve all problems.”
At that point, the European Union would have to consider its response, Dombrovskis said, adding that the bloc did not want to enter a subsidy race.
“We are not taking off the table different options. Some colleagues mentioned the question of WTO challenge, but we are not sabre-rattling either. Right now we are focusing on negotiations,” he said.
Dombrovskis said U.S. Secretary of State Antony Blinken had referred to possible U.S. options to ease EU concerns, such as interpreting the term free trade partner more loosely so that the EU could be granted an exemption.
Asked what the United States might do, U.S. Treasury Secretary Janet Yellen declined to provide specifics.
“We will look at what is legal and what is feasible … but we have to write rules within the context of the legislation,” she told reporters in Fort Worth, Texas.
(Reporting by Philip Blenkinsop; Additional reporting by Andrea Shalal in Fort Worth, Texas; Editing by Mark Heinrich and Cynthia Osterman)
