Spanish Prime Minister Pedro Sanchez.
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DAVOS, Switzerland — Spanish Prime Minister Pedro Sanchez told CNBC on Monday that the European Union has something to learn from Washington and its new inflation-fighting policies, saying he hopes a trade war between both sides could be avoided.
“We have to learn,” Sanchez told CNBC when asked about the Cut Inflation Act that the United States hopes will make it the go-to place for green investments.
“We need to reform some internal aspects of our industrial policies such as state aid, reduce bureaucracy and try to send a message to global industry, this is Europe, and of course Spain, it It’s a good place to set up shop,” he added.
The sweeping US legislation, which was approved by US lawmakers in August and includes a record $369 billion in spending on climate and energy policies, received a mixed response from the 27 EU countries. The European Commission, the executive arm of the EU, has previously said there is “serious concerns” on the design of the financial incentives in the package.
The EU has listed points in the US Inflation Reduction Act that it says could violate international trade rules. One of the biggest sticking points for Europeans is tax credits for electric cars made in North America. This could pose challenges for European automakers focusing on electric vehicles, such as volkswagen.
It has been suggested that Washington could find ways for European companies to access these green subsidies, but that has further infuriated some European politicians. Belgian Prime Minister Alexander De Croo, for example, recently accused the United States of an “aggressive” campaign to lure businesses to its shores with the measures.
“I hope not,” Sanchez said when asked about the possibility of a trade war breaking out between the US and the EU.
“I think we need to have this dialogue to come to an agreement,” he said.
“I think that [Russia-Ukraine] the war also shows us the importance of unity on the defense side but also on the economic side within Western countries,” he added.