San Francisco Frontiers - Macron to raise US subsidies in talks with Biden next week

France and other EU countries are increasingly alarmed that the Inflation Reduction Act (IRA), which Biden signed in August, will distort transatlantic trade to give American companies an unfair advantage.

The act, designed to accelerate the US transition to a low-carbon economy, contains around $370 billion in subsidies for green energy as well as tax cuts for US-made electric cars and batteries.

"We cannot risk more de-industrialisation in Europe at a time when we're trying to re-industrialise," a senior aide to Macron told reporters ahead of the French leader's trip to Washington from Tuesday night.

The biggest concern is about "American investment in Europe being repatriated," he said during a briefing ahead of what will be the first state visit by a foreign leader to Washington under Biden.

Although Macron appreciates no major changes can be made to a law seen as one of Biden's main legislative achievements, he is hoping to carve out "exemptions" to help European industries.

"We can imagine that the American adminstration agrees to exemptions for a certain number of European industrial sectors, perhaps in the same way as they're doing for Canada and Mexico," the aide added.

Macron, 44, has long favoured a Buy Europe Act that would offer incentives and requirements for consumers and governments to buy EU-made equipment.

But the idea faces resistance from countries such as the Netherlands and Germany, which worry about the costs and the impact on trade.

"The message from the Americans is 'Do your own IRA'," the French aide said.

Macron "will draw the necessary conclusions for us as Europeans from the conversations", he added.

- 'Gap' -

The tension over US industrial policy is one of several areas of friction between the European Union and Washington that Macron will raise next week during his state visit.

EU countries are also frustrated about the huge profits being made by US energy exporters as they supply LNG gas to Europe in the wake of Russia's invasion of Ukraine in February.

"Europe is giving and suffering the most in terms of sanctions against Russia," the French official said, referring to the sanctions introduced on the Russian energy and industrial sectors.

"We see the risk of a gap developing between Europe and the United States," he added, stressing the need for a new "synchronisation".

Macron is set to arrive on Tuesday evening in Washington before beginning a two-day official programme that will see him given the full honours of a state visit at the White House on Thursday.

He will be the first French president to have been offered two state visits, which have the highest level of diplomatic protocol, his office said.

His first came at the invitation of Donald Trump in April 2018 amid another transatlantic trade dispute over US tariffs on steel and aluminium introduced by the former Republican president.

That trip was memorable for Trump publicly flicking dandruff off Macron's suit and the two men planting an oak tree in the White House garden that was later removed, then died.

Ties between Macron and Biden were severely strained by a row over supplying submarines to Australia in 2021, but have since recovered, with the two men speaking and meeting regularly.

"The relationship (with Biden) is very fluid, friendly and very open on all issues," the French official said.

"The presidents Trump and Biden are not at all the same personality and the dynamic is not the same," he added.

Macron will be accompanied by a large delegation of ministers and business leaders, with the visit set to feature talks about nuclear energy and space cooperation.

He will travel to New Orleans on Friday.

G.Miller--SFF