The European Union hopes to resolve in upcoming negotiations a dispute with the U.S. over new subsidies for North American manufacturers, a senior diplomat from the bloc said October 31.

The recently passed U.S. Inflation Reduction Act, which provides subsidies to support green technologies in the U.S., is seen as discriminatory by the EU, South Korea and other trading partners.

An EU-U.S. task force is scheduled to discuss the issue early November, ahead of a December meeting of the U.S.-EU Trade and Technology Council. That council, a consultative forum set up in 2021, has emerged as a powerful tool for boosting trans-Atlantic cooperation, but the electric-vehicle subsidy issue has served as a notable irritant.

“It has to be worked out,” Stavros Lambrinidis, the EU’s ambassador to the U.S., said in an interview on Bloomberg Television’s “Balance of Power with David Westin,” referring to the subsidy question. “This is what I hope we will reach in those talks. When both of us do the right thing in the right direction, I have no fear for where we are going.”

While praising the legislation as a “huge positive step forward” to support a transition to sustainable energy in the U.S., Lambrinidis lamented that the package gives incentives only to companies that are based or are investing in the U.S. Europe’s incentives, by contrast, aren’t discriminatory, he said.

"Nondiscrimination" Call

“There is no way you can transition to electrical vehicles as fast as the U.S. wants to do if you exclude European cars from the equation,” he said. “We give Tesla the same incentives we give our companies. This is the kind of nondiscrimination that can help our economies.”

The co-chairs of the Trade and Technology Council October 26 discussed topics including the electric vehicle provisions in the Inflation Reduction Act, and the need to continue engagement on the issue. Following the talks with U.S. Trade Representative Katherine Tai, European Commission Executive Vice President Valdis Dombrovskis said that an exemption is an ideal solution for the EU on the U.S. act.