Europe a victim of the war in Ukraine and the US-Chinese rivalry

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At the beginning of December, the Spanish daily “El Pais” published an article by the American political scientist Prof. Henergo Farrell from the Johns Hopkins School of Advanced International Studies, who writes directly that in the face of changes taking place in the world, the European Union must think about its own industrial policy. As emphasized by prof. Farrell, European countries are not targeted by the Americans, but they could become accidental victims if they are unable to position themselves as “vital allies in the US’s efforts to compete with China.” Europe is being hit by rising fuel and raw material prices, the effects of broken supply chains and restrictions on CO2 emissions, causing European companies to start relocating to the US and China. But not only. The flight of industry from Europe is also the result of Washington’s new industrial policy, which, according to the European Commission, violates the principles of fair competition. In August 2022, US President Joe Biden signed the Inflation Reduction Act (IRA). Thanks to it, USD 737 billion will be pumped into the American economy, of which USD 369 billion will be these will be subsidies for American companies. The money will be spent promoting US-made technologies (electric vehicles and batteries, hydrogen, energy storage and the electricity industry) and diversifying supply chains away from China. To receive this financial support, products must be manufactured in the United States. The European Commission has already announced retaliatory measures, as these regulations – according to officials from Brussels – discriminate against European exporters and contribute to the deindustrialization of Europe. Brussels threatened the White House with a referral to the World Trade Organization and a counter-subsidy package, while accusing America of treason and even war profiteering. Several European companies producing clean energy – e.g. from Sweden and Spain – have already announced the transfer of their investments to the United States. Alarmed by this phenomenon, European leaders began to intervene directly with Biden. In early December, French President Emmanuel Macron flew to Washington on a mission to put pressure on the American administration to make exceptions to the IRA act for European countries. Biden was supposed to promise the French leader amendments to the law, but no details of the changes were given. Washington devises how to gain a technological advantage over its biggest rival – China. One of the ideas to become independent of semiconductor supplies from China and Taiwan is to be signed (also in August this year) by Biden the Chips and Science Act. It provides subsidies totaling $52.7 billion for semiconductor research, development and manufacturing in the US. It is followed by announcements of new investments by the Taiwanese semiconductor company TSMC, as well as American companies: Intel, Micron and IBM. Money.pl, KR The article Europe as a victim of the war in Ukraine and the US-Chinese rivalry comes from the Polish Economy Forum website.

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