The EU clearly needs to do something to compete with the protectionist plans of Joe Biden and also of China’s industry, but the 27 must pull the strings between the very different interests of each member. There is a rationale outlined by the European Commission for state aid relief, which is controversial in the community space given the risk of undermining the single market, and countries with more financial muscle have a greater competitive advantage than others. partners. And it’s at this point that France and Germany clash with the rest of the member states, who want to impose restrictions on subsidies if they don’t leave things as they are.
Of the €672 billion in national grant schemes approved by Brussels from 2020, Germany and France claimed the largest share at 53% and 24% respectively. The two countries are arm in arm in response to Biden’s Inflationary Reduction Act (IRA) and want to use all their financial artillery. Because they have. But this is not the case with other partners with smaller or less fiscal capacity. For example, Italy is the second European industry, but it has no room for maneuver. Others, such as Sweden, with more liberal stances, have warned of the risks of entering a subsidy war.
“There are countries that want to remove what is there and wide sleeves,” diplomatic sources admit of France’s intention – which is fighting it the hardest, although Germany is also pushing – to increase the amount in which up to 100 million state aid must be reported to the European Commission. At the moment, this figure is 10 million euros. This is an unattainable position for most community partners. Another bet the two countries are using is to use competition rules to allow companies that threaten to go to the US for their tax breaks to “contrasferote”. This proposal has not met with much opposition given that the flight of the industry is a scenario that is increasingly feared in the EU.
For now, the European Council this Thursday, in which Volodymyr Zelensky was the main protagonist, approved some very general conclusions, in which he called on the European Commission to deepen the four pillars of the industrial plan, which he presented last week at the request. leaders. Procedures should be simpler, faster and more predictable, and allow limited and temporary support to be applied quickly, including tax breaks, to sectors that are strategic for the green transition and negatively affected by foreign subsidies or high energy prices. The document says.
In Spain, they are quite happy with the conclusions, as it includes their contribution to speeding up the reform of the electricity market as much as possible, given that excessive energy prices have a negative impact on competition. In the rest, it maintains an intermediate position between the “coffee for everyone” European giants and the fears of the smallest. What Pedro Sánchez advocated is for public aid to be more flexible, but temporarily and only in certain sectors aimed at the ecological transition, such as electric cars or renewable energies, among others.
The claim is also to improve access to currently available funds and extend investment efforts beyond 2026, which recovery funds are currently considering. Likewise, government sources are positive about helping countries that do not have the financial capacity to level the playing field: “The easing of state aid should be accompanied by European funding for those that do not have as much fiscal space.”
Source: El Diario