The EU is complaining that while it allows government tax breaks or subsidies for purchases of U.S. electric cars like Tesla (TSLA.O), the United States makes such support conditional on the car, or parts of it, being made in the United States.
“Last month Tesla model Y was the most sold car in Germany,” European Commission Vice President Valdis Dombrovskis, responsible for trade, told a news briefing.
“That would not have been possible without the un-discriminatory EU subsidy, while EU electric cars do not get a similar subsidy in the U.S., which is discrimination that we want to address,” Dombrovskis said.
The EU car makers – such as Volkswagen – are affected by the U.S. legislation which covers a host of other products.
He said the problem also concerned a wide range of goods from the “green economy” sector, including batteries, hydrogen, and renewable energy equipment.
“There is a willingness to engage on the U.S. side on this,” Dombrovskis said ahead of meetings on the issue with U.S. Trade Representative Katherine Tai, Commerce Secretary Gina Raimondo and Treasury Secretary Janet Yellen on Thursday and Friday.
“We hope we can resolve these issues before they become disputes,” he said, adding talks would focus on whether changes to the status of EU companies could be made through implementation regulations to the U.S. law, rather than having to send the whole Inflation Reduction Act back to Congress for amendments.
