REALITY CHECK: MACRON IS TOO LATE
The time to lobby about the IRA was last year. And the person to lobby was Sen. Joe Manchin (D-W.Va.). Large American companies and the federal government have sometimes found themselves in a similar situation in Brussels as Macron finds himself now. In those cases, EU antitrust decisions or regulations such as the privacy rules established by the General Data Protection Regulation were greeted with rage and astonishment, often because those companies failed to take the legislative draft process seriously, or engaged too late in the day to effect it. Even if the IRA is protectionist, and possibly illegal under World Trade Organization rules — as the EU claims — it would take years for Brussels to win a ruling on the matter in Geneva. In the meantime, Congress isn't going to bend because an ally brings macaroons to a State Dinner. Equally, the EU has time to adjust. Building out a domestic U.S. supply chain for the critical minerals needed to build EVs will be a slow process. More than 25 percent of America's lithium needs are met through exports, along with 48 percent of its nickel, 76 percent of its cobalt and all its graphite and manganese, per Atlas Public Policy . BIDEN HAS TWO ACES TO PLAY … CLIMATE: WTO guidance says its " overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects." EU leaders will have trouble arguing before a WTO panel that the planet's possible destruction is not an "undesirable side-effect" of an auto industry free from EV subsidies. The EU also wants climate action and spends a lot of money delivering it. Indeed, the bloc's Covid recovery plan is a nearly $2 trillion package known as the European Green Deal . The spirit of the EU deal is copy-pasted from Rep. Alexandria Ocasio Cortez (D-N.Y.) and her allies. On Tuesday Al Gore argued European leaders should stop pushing back on the IRA and instead take the same approach and establish green subsidies. POLITICS: Biden passed the IRA with an eye on the 2024 election. And since nearly every EU political leader wants to see Biden reelected, they're likely to suck it up when it comes to Buy American rules for electric vehicles. SO WHAT'S NEXT? U.S. Treasury could finesse its implementation of the IRA so that European companies are given similar exceptions as Canada and Mexico. But the EU doesn't have a trade deal with the U.S., as America's neighbors do. The real landing zone in this week's discussions is not unwinding or softening the IRA. No-one in Paris thinks that is going to happen. For proof, look no further than today's POLITICO Paris Playbook where Macron's D.C. visit appears only from the 17th paragraph onwards. The real action is around whether an informal understanding can be reached on how to avoid a larger tit-for-tat trade war. German Economy Minister Robert Habeck told an industrial conference in Berlin on Tuesday that he did not want the EU to follow Washington down the protectionist path. Yet he outlined a policy that goes quite a bit in that direction, and which France has already given a name: "Buy European." More by Hans von der Burchard . The problem is basic game theory. EU green tech subsidies (such as Germany's $9,000 bonus for electric cars) are open to suppliers from all over the world, whereas Biden's are reserved for tech produced in North America. Unless the EU can convince the U.S. to cooperate, European national governments may decide they have to reserve their subsidies for local producers. Whatever they decide, Europeans have only themselves to blame for their industrial and strategic failings, argues Matthew Karnitschnig . WHERE TO JOIN GLOBAL INSIDER Was your Thanksgiving travel like Global Insider's? Hit and miss; highs with and some expensive lows? POLITICO invites you to debate the Travel Experience Redefined, Dec 7, 8.30 a.m. ET online or at the Madison Hotel in D.C. Register here . We'll look at how inflation, supply chain bottlenecks and labor shortages are affecting your travel experiences. And we'll address how a recession might shake up the landscape even more. POLITICO will unveil its European POLITICO 28 power list at an annual gala dinner in Brussels, also Dec. 7. European Parliament President Roberta Metsola will be the keynote interview. You can watch online by registering here .
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