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Auto industry calls for new trade agreement with USA

MarketScreener | 20 February 2023

Auto industry calls for new trade agreement with USA

BERLIN (dpa-AFX) - In view of billions in subsidies in the United States, the German auto industry is pressing for rapid negotiations on a free trade agreement with the United States. The Transatlantic Trade and Investment Partnership, known by the acronym TTIP, originally sought between the EU and the United States, had failed. "TTIP was an opportunity, a missed opportunity," Hildegard Müller, president of the German Association of the Automotive Industry (VDA), told the Funke Mediengruppe newspapers (Monday). "We must therefore quickly talk about new agreements with the United States."

With the so-called Inflation Reduction Act (IRA), the U.S. is pursuing a "real settlement policy" that the auto industry would also like to see in Europe, Müller said. In Europe, on the other hand, the focus is on more regulation. The VDA president called for a dedicated bureaucracy reduction program. "It’s not about more subsidies, but about real location improvements."

The Inflation Reduction Act (IRA) in the U.S. is a law that also provides high tax incentives for electric cars and renewable energies. The ten-year U.S. subsidy package is worth $370 billion (currently 346 billion euros).

EU countries fear that the IRA program could give the U.S. a competitive advantage in investment. For this reason, several countries, including Germany, had called for a relaxation of European state aid law in order to keep production sites in Europe. In the future, the EU wants to allow member states to provide more targeted subsidies to companies in order to compete with the U.S. and China in climate-friendly technologies. State aid procedures are to become simpler and faster.

 source: MarketScreener