Scholz upbeat about trade truce with US in ‘first quarter of this year’ – POLITICO

PARIS – German Chancellor Olaf Scholz on Sunday expressed optimism that the EU and the United States could conclude a trade truce in the coming months to prevent discrimination against European companies due to US grants.

Speaking at a press conference with French President Emmanuel Macron following a joint Franco-German cabinet meeting in Paris, Scholz said he was “confident” that the EU and US could reach an agreement “in the first quarter of this year” to address measures under the US Cut Inflation Act that Europe fears will divert investment in key technologies from the continent.

“I feel like there is a great understanding in the United States [of the concerns raised in the EU]”, said the Chancellor.

Macron told reporters that he and Scholz supported attempts by the European Commission to negotiate exemptions from US law to avoid discrimination against European companies.

The new optimism came as the two leaders adopted a joint statement in which they called for relaxing EU state aid rules to boost local green industries – in response to US law. The text says the EU needs ‘ambitious’ measures to increase the bloc’s economic competitiveness, such as ‘simplified and streamlined procedures for state aid’ that would allow more money to flow into strategic industries .

The joint statement also stressed the need to create “sufficient funding”. But in a victory for Berlin, which has been reluctant to talk about new EU debt, the text says the bloc should first make “full use of available funding and financial instruments”. The statement also includes a non-specific reference to the need to create “solidarity measures”.

EU leaders will meet early next month to discuss Europe’s response to the Cut Inflation Act, including the Franco-German proposal to ease state aid rules .

The relationship between Scholz and Macron hit a low in recent months when the French president canceled a joint Cabinet meeting scheduled for October over disagreements over energy, finance and defence. But the two leaders have since found common ground on the response to green subsidies in Washington’s Inflation Reduction Act. Macron said Paris and Berlin had worked in recent weeks to “synchronize” their visions for Europe.

“We need as much convergence as possible to help Europe move forward,” he said.

But there was little convergence on how to meet Ukraine’s repeated demands for Germany and France to deliver battle tanks, fearing a new Russian offensive in the spring.

Asked if France would send Leclerc tanks to Ukraine, Macron said the request was under consideration and that there was work to be done on this issue in the “days and weeks to come”.

Scholz dodged the question of whether Germany would send Leopard 2 tanks, pointing out that Berlin had never stopped supporting Ukraine with arms deliveries and made its decisions in cooperation with its allies.

“We have to fear that this war will last for a very long time,” said the Chancellor.

Reconciliation, past and present

The German Chancellor and her cabinet were in Paris on Sunday to celebrate the 60th anniversary of the Elysee Treaty, which marked a reconciliation between France and Germany after World War II. The celebrations, first at the Sorbonne University and then at the Elysée, were also an opportunity for the two leaders to put aside their recent disagreements.

Paris and Berlin have been at odds in recent months not just over defence, energy and finance policy, but also over Scholz’s controversial €200 billion package for cutting energy prices, which was announced last fall without first involving the French government. Those tensions culminated when Macron snubbed Scholz by canceling, in an unprecedented fashion, a scheduled press conference with the German leader in October.

At the Sorbonne, Scholz admitted that relations between the two countries were often turbulent.

“The Franco-German engine is not always a quiet purring engine; it’s also a well-oiled machine that can be noisy when looking for compromises,” he said.

Macron said France and Germany needed to show “new ambition” at a time when “history is once again becoming unbalanced”, in reference to Russia’s aggression against Ukraine.

“Because we have paved the way towards reconciliation, France and Germany must become pioneers for the recovery of Europe” in areas such as energy, innovation, technology, artificial intelligence and diplomacy, he said.

On the defense side, Paris and Berlin announced that Franco-German battalions would be deployed in Romania and Lithuania to reinforce NATO’s eastern front.

The leaders also welcomed “with satisfaction” the recent progress of their joint fighter aircraft project, the SCAF, and said they wanted to move forward on their Franco-German tank project, according to the joint statement.

The joint statement also indicates that the two countries are open to the long-term project of changes to the EU Treaty and that in the shorter term they wish to overcome the “impasses” in the Council of the EU by moving to a vote at qualified majority in matters of foreign policy and taxation.

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