Such a response should resolve the EU’s dilemma between protecting the single market and the softening of national subsidy bans.
The Inflation Reduction Act (IRA), which promotes the green transition and “buying American,” urges European leaders to devise a strategy and not lose out globally amidst protectionist industrial policy developments. “Europe needs industrial policy, Europe needs the internal market, so Europe needs an industrial policy that works in the internal market,” writes Dr Nils Redeker, the Jacques Delors Centre’s Deputy Director.
In an op-ed with Tagesspiegel from 6 February 2023, Nils Redeker argues that the German “federal government must […] work on a European response to the challenges of the IRA.” According to Redeker, this response should focus on three goals. First, the EU should “safeguard national strategies in the short term” to ensure that all member states can afford necessary investments. Second, “the EU needs to invest jointly where national policies do not price in European advantages” to compete with large markets such as the US and China. Finally, Redeker argues that the European answer to the IRA would involve “not more, but smarter industrial policy than the rest of the world,” ensuring that the EU can get the best bang for its industrial policy buck.
You can read the full op-ed (in German) here.