Habeck visit to the US: ‘Window’ for American subsidies to German electric cars

In the hope of reviewing the American “Law on Reducing Inflation” for European cars, she has been visiting since yesterday, her Minister of Economy, Robert Hambeck, according to the German press. In this case, it could, as reported in Handelsblatt’s report, possibly be allowed the US State subsidy for ‘green’ investments (electric cars) provided only American raw materials are used for the batteries of electronic cars (German-based companies). Such a possibility even “plays” to happen even before the elections, especially on April 4 – 5, when the American Trade and Technology Council (TTC) will meet, for the last time before the presidential elections of November. More detailed four are the main fronts on Hambeck’s agenda during his visit to the US: 1. Law on Reduction of Inflation: Germany’s car companies wait endlessly The Law on Reduction of Inflation (IRA) was the intermediate culmination of the crisis of commercial policy. Biden wants to attract green industries to the country with billions of subsidies, especially in the area of electronic mobility. Due to these and other subsidy rules, Porsche, for example, is considering building its new battery factory in the US instead of Baden-Württemberg. The biggest problem for Europe is that the IRA contains rules that largely exclude European car manufacturers from billions of subsidies. Consequently, they hope on April 4 and 5. The Trade and Technology Council (TTC) is then expected to meet for the last time before the American elections, as Handelsblatt learns from government circles. And there is a small chance that the IRA will “open” for European car manufacturers. There is an exception for rental vehicles. According to stakeholders, this would freeze at least half of the subsidy for about 50-60% of vehicles exported from Germany. However, there is still no solution for the other half and for unleaded vehicles. This is because Washington has linked subsidies to the condition that only American raw materials are used for electronic car batteries. The intention to “open” production to Europeans with an agreement on raw materials has been formulated for over a year. However, negotiations were increasingly delayed. The president of Komision, Ursula von der Leyen (Ursula von der Leyen) traveled to Washington especially for the expected completion in October 2023 – and returned empty-handed. Economy Minister Hambeck has now raised hopes, without going into more details about these negotiations: “I think this can still be finalised with the Biden government.” The American Trade and Technology Council (TTC) in early April is probably the last chance for this. 2. No progress on steel duties The EU’s punitive tariffs on steel and aluminium that Trump once imposed continue to burden the transatlantic partnership. Early in the week, Handelsblatt was informed by German government circles that no progress can be made on steel tariffs with the Biden government until the November presidential election. Hambeck confirmed it now: “We failed to reach an agreement on aluminium and steel”. The quota regulation had been extended until the end of 2025 – according to the negotiators, knowing that Biden could not move before the election. The suspension of European fares for Harley motorcycles and whiskey expires in mid-2025. If Biden remains president, this lead would give them at least a small influence, according to the negotiators. 3. WTO Reform: “Lex Trump” leads nowhere If, on the other hand, Trump is elected to the White House, Brussels has already prepared a “Lex Trump”. Because then it would be certain that customs duties would be applied quickly and again as a whole. In order to have the opportunity to take action against this, a few weeks ago the EU resumed its proceedings at the World Trade Organisation (WTO) against US duties — to the government’s detriment Biden, who sees it as a vote of mistrust in his ambitions for a second term in office, says a diplomat. But it is up to Biden, of all people, to decide whether the EU complaint to the WTO can have any effect on Trump. At the moment, he could not: the WTO has been paralyzed for years because the Americans have blocked him by refusing to replace the judges. Only if Biden abandoned this blockage could a case against punitive tariffs succeed in the future. However, the American delegation at the WTO ministerial conference last week in Abu Dhabi did not show much willingness to reform. According to those involved, the Biden government is certainly willing to make progress at the WTO. However, Biden cannot retreat in front of Congress, which means that nothing will happen at least until the election. 4. Trade agreement: Even a customs agreement is a German dream The fact that no progress is made in the small details is in complete contradiction with the wishes of the German Government. In recent months, the FDP and Chancellorship have been dreaming of a new version of the Transatlantic Trade and Investment Partnership (TTIP) that failed in 2016. Even the Green Party, which criticises TTIP, has at least presented ideas for a customs agreement. But one thing is clear: With Biden there will be none of this. Even if re-elected, it is difficult to imagine that it will deviate from this course. If Trump is elected, transatlantic trade will collapse even more than during his first term. It examines the imposition of a general duty of 10 per cent on all imports. The German economy will suffer losses of up to 150 billion euros during its four-year term, according to calculations by the German-economic pro-working Institute (IW) in Cologne. There is no complete immobility in commercial policy under Biden, as it existed during the Trump era. However, progress is limited to detailed issues such as harmonisation of standards or simplification of digital exchanges. There is also agreement on measures against electronic cars imported from China. “We can still do a few things, but we won’t be able to do everything,” Hambeck says. A government insider puts it even more drastically: “When it comes to big issues, there is really nothing transatlantic.”

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