How should the EU react in the competition for promising industries with countries like the USA and China? EU Commission President Ursula von der Leyen will present proposals on this controversial issue on Wednesday.
Since the government in Washington, for example, decided on enormous economic aid, there has been a fear in the EU that companies could set up new locations in other regions of the world or relocate jobs there if they are not also supported here with taxpayers’ money. At the same time, the EU Commission wants to strengthen climate-friendly energy production in Europe with the initiative.
Specifically, the requirements for state aid in the EU are to be further relaxed in the future, as can be seen from the draft available to the German Press Agency. Accordingly, they should be granted for more technologies, be higher than before and be granted over a longer period of time. The EU Commissioner Margrethe Vestager, who is responsible for competition, also wants to present further details on Wednesday.
Federal Minister of Economics Robert Habeck (Greens) said on Tuesday that decisive improvements had to be made, especially with regard to the state aid rules. Other EU countries, on the other hand, are concerned that the rules will be relaxed too much. They fear that large countries like Germany could invest significantly more tax money and thus gain disproportionate advantages for themselves and their companies.
Billions of dollars from the other major economies
The finance ministers of Ireland, Austria, the Czech Republic, Denmark, Estonia, Finland and Slovakia recently warned that European competitiveness is not based on permanent or excessive non-targeted state aid. This could lead to states trying to outbid each other, which is not acceptable for individual member states.
The EU Commission’s draft also emphasizes that China has announced investments in clean technologies of more than 280 billion US dollars (around 258 billion euros). With its so-called Inflation Reduction Act, the USA is mobilizing more than 360 billion dollars (around 331 billion euros) for similar projects. “I see it as an incentive for Europe to do its utmost now and become faster and better at promoting green technologies,” said Habeck.
“The EU Commission has finally recognized the urgency of doing something about Europe’s deteriorating competitiveness,” said Fredrik Persson from the Business Europe interest group. According to the lobbyist, von der Leyen is showing leadership with her proposal. The head of the Left Group in the EU Parliament, Martin Schirdewan, was critical: “It falls far short of the American plan.” In the USA, for example, more requirements for climate protection, isolated regions and good jobs would be linked to subsidies.
