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EU and U.S. Advocates Call on EU to Stand Down on Threats to Inflation Reduction Act

WASHINGTON – Ahead of high-level U.S and EU meetings to discuss the ongoing disagreement over clean vehicle tax credits in the Inflation Reduction Act (IRA), prominent U.S. and EU environmental and other civil society organizations, including Sierra Club, Natural Resources Defense Council, European Trade Justice Coalition, and Public Citizen, called on their governments, urging leaders to prioritize climate goals over outdated trade rules.

The letter, sent today, comes as Executive Vice President of the European Commission Valdis Dombrovskis, Commissioner for Trade, travels to Washington D.C. for meetings on March 1-3 with key U.S. officials, including Treasury Secretary Janet Yellen and U.S. Trade Representative Katherine Tai. His goal is to “negotiate better outcomes for the EU” with respect to clean energy and other tax credits in the IRA, just as the U.S. Treasury Department prepares for a March release of guidance on the criteria to be considered a “free trade agreement.” 

The letter, signed by more than 40 organizations representing millions of people on both sides of the Atlantic, reads: 

As part of any EU-U.S. transatlantic sustainable trade initiative, we urge the EU to refrain from challenging the IRA with trade instruments. And we call on the U.S. and EU to commit to a Climate Peace Clause to protect climate policies around the world from trade disputes, as well as to make good on climate financing and green technology transfer to countries in the Global South. 

The text of the letter and list of signatory organizations are available here. Quotes from organizational representatives follow.

“This is simple: climate action has to take precedence over trade rules. The EU would do the fight against climate change a huge disservice if it challenged the Inflation Reduction Act in trade tribunals. Instead the EU should increase its efforts to pursue a genuine ecological and fair industrial policy. Such efforts must be accompanied by increased climate financing and green technology transfer so that countries in the Global South don’t lose out from increased climate action in the U.S. and EU.”

— Fabian Flues, trade campaigner, PowerShift Germany

“If the U.S. and EU are serious about negotiating a new ‘transatlantic sustainable trade initiative’ as part of the Trade and Technology Council, they first need to commit to ‘do no harm’ by refraining from attacking one another’s climate legislation, such as the IRA. Will the Biden administration stand up to these trade threats and implement the law as intended to create green jobs and boost manufacturing in the clean energy economy? And will they commit to supporting other countries as they enact their own bold climate policies?”

— Melinda St. Louis, director, Public Citizen’s Global Trade Watch

“Countries desperately need to enact bold climate measures and cannot allow outdated trade rules to get in the way. By committing to not challenge other nations’ climate initiatives as violations of old trade rules, the United States can simultaneously encourage countries to take more ambitious climate action and better defend its own climate-focused industrial policy.”

— Arthur Stamoulis, executive director, Citizens Trade Campaign

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