Scholz optimistic about trade truce with US in ‘first quarter of this year’

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

Speaking at a press conference with French President Emmanuel Macron after a joint Franco-German cabinet meeting in Paris, Scholz said he was “convinced” that the EU and the US could reach an agreement “in the first quarter of this year” to measures under the US Cut Inflation Act that Europe fears will divert investment in key technologies away 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 efforts by the European Commission to negotiate exemptions from US law to prevent discrimination against European companies.

The new optimism came as the two leaders adopted a joint statement calling for EU state aid rules to be relaxed to boost local green industries – in response to US law. The text says the EU needs “ambitious” measures to boost the bloc’s economic competitiveness, such as “simplified and streamlined state aid procedures” that will allow more money to flow to strategic industries.

The joint statement also stressed the need to create “sufficient funding”. But in a win for Berlin, which was hesitant to talk about new EU debt, the text says the bloc must first “make full use of available funding and financial instruments”. The statement also contains 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 relax state aid rules.

Relations between Scholz and Macron reached an all-time 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 agreed on how to respond to green subsidies in Washington’s Inflation Reduction Act. Macron said Paris and Berlin have been working in recent weeks to “synchronize” their visions for Europe.

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

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

Asked if France would send Leclerc tanks to Ukraine, Macron said the request is pending and work to be done in the “days and weeks ahead”.

Scholz evaded the question of whether Germany would send Leopard 2 tanks, pointing out that Berlin had always supported 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,” the chancellor said.

Reconciliation, past and present

The German chancellor and her cabinet were in Paris on Sunday to celebrate the 60th anniversary of the Élysée 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 differences.

Paris and Berlin have been at odds in recent months, not only over defense, energy and financial policies, but also over Scholz’s controversial €200 billion package of energy price cuts, which was announced last fall without first consulting the French government. involve. Those tensions culminated when Macron slammed Scholz by canceling a scheduled press conference with the German leader in October in an unprecedented fashion.

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

“The Franco-German engine is not always a silent whirring engine; it is 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 again unbalanced”, referring to Russia’s aggression against Ukraine.

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

On the defense side, Paris and Berlin announced that Franco-German battalions would be deployed to 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 FCAS, and said they wanted to move forward with 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 they want to break the “deadlocks” in the Council of the EU in the shorter term by moving to a qualified vote. majority on foreign policy and taxation.

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