BRUSSELS BEHIND THE SCENES
Weekly analysis and untold stories
With SAM MORGAN
Baguette diplomacy
Emmanuel Macron celebrated the inimitable qualities of the French baguette this week during his state visit in Washington. The humble pain’s UNESCO recognition was, perhaps, a trigger for a different kind of success during a difficult transatlantic mission.
UNESCO’s recognition of the baguette as an example of intangible cultural heritage was a predictable trigger for lots of memes, jokes and waxing lyrical about the achievements of French savoir faire.
Macron did a bit of that himself, brandishing a baguette during a genuinely funny speech towards the start of his United States visit. The president was also all smiles for photographers when he and wife Brigitte met Joe and Jill Biden.
But Macron did not hop across the pond for the sake of the baguette. His most important objective was to try and convince the US to rethink its hefty subsidies policy for ‘Made in America’ green technology.
BRUSSELS BEHIND THE SCENES is a weekly newsletter which brings the untold stories about the characters driving the policies affecting our lives. Analysis not found anywhere else, Sam Morgan helps you make sense of what is happening in Brussels. If you want to receive Brussels behind the scenes straight to your inbox every week, subscribe to the newsletter here.
France’s president was accorded all the glitzy honours of a state visit this week. All of the official statements and photo ops suggest that Franco-American relations have never been stronger or healthier.
Appearances can obviously be deceiving though, considering Macron is a seasoned statesman. Remember that he looked perfectly comfortable in the company of Donald Trump when he was commander-in-chief.
Below the surface though lurks an issue that threatens to sour transatlantic ties quite drastically. It might also spill over into other areas where Europe and the States would quite like to or even need to cooperate.
The Inflation Reduction Act is one of Joe Biden’s main successes as US president and he had to fight tooth and nail to get it through Washington’s laborious legislative process.
Part of the multibillion dollar policy is a subsidy scheme for electric vehicles. To qualify for perks, motorists have to buy ‘Made in America’ cars. This has not gone down well at all with European leaders.
The Office offers an apt explainer of the Brussels-Washington spat over the IRA. In a Christmas episode, hapless boss Michael Scott exceeds the $20 secret Santa gift limit by buying protege Ryan Howard a $400 video iPod.
Jim, Pam and the rest of the gang are put out by this rule-breaking splashing of cash and Michael himself throws a tantrum when he is gifted a homemade oven mit, equating the monetary value of a present with the giver’s level of care or esteem.
Biden’s electric car perks are similar in a way. European countries cannot throw around the same amount of money the States can, while the White House will say that getting people into zero-emission transport is all part of a shared climate fight.
Trade rifts are nothing new. The Airbus-Boeing dispute has only recently gone off the boil but this latest spat risks reigniting tempers at the World Trade Organisation.
EU officials have quietly floated the idea of launching a ‘Made in Europe’ scheme but that won’t work for a number of reasons.
Firstly, cash is tight. Secondly, it would undermine the regulatory environment that is being built. Finally, Brussels has spent the last couple of months insisting that the Biden perks are not WTO-compatible. Mirroring them would be slightly hypocritical.
Wary of losing industries to US shores, Macron went to Washington with the lofty goal of forcing a complete change of policy. That is unlikely to happen because the protectionist element of the policy is the unique selling point for a lot of US lawmakers.
Opening it up to European carmakers would be counterproductive. Politicians on the other side of the pond have already urged non-American marques to come set up shop in the US to qualify for the cash.
To Macron’s credit though, Biden has cryptically promised to make tweaks to the IRA.
“There's tweaks that we can make that can fundamentally make it easier for European countries to participate [...] but that is something that is a matter to be worked out," the US president told reporters.
Perhaps some small loopholes can be written into the rules but Biden is not going to mess too much with his biggest presidential win. Especially not with a possible reelection bid looming ever nearer in 2024.
Even if Macron has succeeded in winning a little bit of respite for European industries, other factors are more likely to see manufacturing go elsewhere. High energy prices are near the top of that list.
Industries in Europe have benefited greatly over the last decade from cheap Russian energy imports, powering factories and plants, keeping profit margins healthy. As we all know, that sweet deal no longer applies.
Europe would be wise not to push the US too far on this issue either. Republicans — who enjoy a bit of protectionism — now control the House of Representatives and have already pledged to scrutinise Biden’s climate agenda.
Blowback on policies like a carbon border tax that the EU plans to deploy soon, as well as carbon pricing of shipping and aviation emissions, might be further areas of conflict if Washington feels aggrieved by European complaints.
Europe has for years chastised the US for not doing enough on climate. Suddenly, the States are ready to pump billions in policies that will green not just its but the global economy.
Washington is damned if it does, damned if it don’t.
BRUSSELS BEHIND THE SCENES is a weekly newsletter which brings the untold stories about the characters driving the policies affecting our lives. Analysis not found anywhere else, Sam Morgan helps you make sense of what is happening in Brussels. If you want to receive Brussels behind the scenes straight to your inbox every week, subscribe to the newsletter here.
