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EU response to the US Inflation Reduction Act (debate)
The Inflation Reduction Act was presented in a positive way in the US – it is supposed to curb inflation, deal with taxation and focus on green energy. Nevertheless, one can perceive that the Inflation Reduction Act is based on unfair cooperation with America’s partners – such as the EU. I will name only few examples of how the Inflation Reduction Act might undermine the European-American friendship. First, the US ties its subsidies and tax breaks exclusively to the production of raw materials, intermediate products and complete production in the US or in North America, undermining the WTO agreements. Second, the minimum tax of 15%, deviates from the international OECD negotiations. It weakens the deal by not being a truly effective tax rate, giving a wrong example and making more countries adopt tax credits or engage in aggressive competition to grant subsidies to companies to ‘compensate’ for higher effective tax rates. This is not what we all fought for. True friendship is about transparency, cooperation and facing challenges together. I call on the Commission to take steps in the discussions with the US. I hope that soon we will not have to quote yesterday’s birthday child Taylor Swift when discussing US-EU relations: ‘So take a look at what you’ve done. Now we’ve got bad blood.’