EU calls for rapid response to Joe Biden's $369 billion environmental package

EU ministers say they are running out of time to resolve the escalating row with the US over Washington's $369 billion in green subsidies and avert a transatlantic trade war.

Brussels and Washington have set up a task force to deal with the implications of the Inflation Reduction Act (IRA) and its "Buy American" provisions, but impatience is growing in European capitals at the lack of progress.

Jozef Sikela, the Czech minister chairing a meeting of EU trade ministers in Brussels on Friday, said he wants to find solutions by the next meeting of the bilateral Trade and Technology Council on December 5.

"It is important for us that the US is aware of our concerns and that the working group has to come up with a solution that is acceptable to both parties," he added. "We will focus on finding specific solutions for the TTC on December 5th.

His comments underscore growing concerns in the EU about the extent of the US subsidy regime and fears that a failure to find better terms for the EU could lead to a serious dispute - at a time when both sides are at odds in the face of the Russian invasion of Ukraine must put transatlantic unity in the foreground.

Dutch Trade Minister Liesje Schreinemacher called the IRA "very worrying" and added: "I want to avoid a trade war at all costs. No one benefits from a trade war."

The IRA offers tax credits and subsidies to US consumers and businesses for products like electric vehicles, wind turbines and green hydrogen, which the US is using to try to reduce its carbon emissions while creating jobs. Most tax credits are only available for products that are largely manufactured in the United States.

The deal comes into force on January 1, but several EU companies have already announced that they would rather make their next investments in the US than in the EU. The much lower energy prices in the US are an additional incentive.

Valdis Dombrovskis, EU Trade Commissioner, said the TTC meeting was "a good time to take stock of the taskforce's work and then decide what the next steps are".

Some EU members, such as Countries like France have called for Brussels to emulate the US law with its own "Buy European" subsidy regime. German Economics Minister Robert Habeck has also proposed an increase in subsidies.

Even Ireland, one of the US's staunchest allies in the EU, has warned of the consequences if a quick solution is not found. Leo Varadkar, Deputy Prime Minister, said: "There will be a response from the EU. No one wants to engage in skirmishes or a subsidy race, but what the US has done is really inconsistent with the principles of free trade and fair competition ."

However, other smaller and more liberal states such as the Netherlands and Sweden have warned against a subsidy race or discriminatory rule that could lead to retaliation from other trading partners.