A MARTÍNEZ, HOST:
The leader of the European Union visits President Biden today.
STEVE INSKEEP, HOST:
Ursula von der Leyen is president of the European Commission, which is the name for their executive branch. She's done this job for more than three years through the pandemic and the war in Ukraine. And when she meets President Biden today, she is representing the interests of dozens of countries, including France, Italy and her own nation, Germany.
MARTÍNEZ: And she's likely to tell President Biden the U.S. is unfair to European companies that make green technology. NPR's Rob Schmitz joins us now from Berlin. Rob, what's she worried about?
ROB SCHMITZ, BYLINE: She's worried that the Inflation Reduction Act of the United States is a protectionist act. This is also called the IRA, and it promises tax breaks to companies making technology for clean energy, but only if their operations are located on U.S. soil. And European leaders are really concerned that EU companies will flee Europe to cash in on these tax breaks. Many here feel that the EU economy could be at stake here. When the IRA passed into law, Volkswagen, for example, announced that it put plans for a battery plant in Eastern Europe on hold because the company said it suddenly stood to save more than $10 billion by moving that plant and with it hundreds of jobs to the U.S. Since then, it's been waiting for the EU to come forth with a rival deal so that it can weigh its options.
But Marcel Fratzscher, president of the German Institute for Economic Research, says he's skeptical about that.
MARCEL FRATZSCHER: To be quite honest, I have big doubts that companies like Volkswagen will really seriously consider moving certain plants from Europe to the U.S. And what I currently see is a bit of a blackmail. So companies in Europe say, you know, let's see what the Europeans are willing to match, how much money we can get in addition. And that's a very dangerous game.
SCHMITZ: And, A, Fratzscher says it's dangerous because these companies are trying to squeeze billions of dollars out of an already cash-strapped EU. And when the EU loses money like this, it has less money to help incentivize carbon-saving climate goals. So in the end, he says, the environment loses and big multinationals win.
MARTÍNEZ: So then, that's got to be why von der Leyen is in Washington.
SCHMITZ: Yeah, she's trying to negotiate changes to the IRA that wouldn't lead to an exodus of European companies to the U.S. to cash in on these incentives. And here in Germany, this is a real threat to the economy. An internal report compiled by the EU and leaked to German media shows that 1 in 4 companies in German industry is considering leaving the country. We also know that multinationals like BASF and BMW are considering leaving, too, because of high energy costs.
MARTÍNEZ: Then how realistic do you think it is for von der Leyen to convince President Biden to accommodate the EU and then stop that exodus from even happening?
SCHMITZ: Yeah, it does seem possible. A senior White House official speaking on background says that the U.S. wants to make sure that incentives under the IRA and EU incentives for clean energy will not be competing with one another in the sort of zero-sum way. If that happened, this official said, it would impact jobs on both sides of the Atlantic and would instead create windfalls for private interests. So it appears that the Biden administration is open to the EU's concerns and would prefer to have a partnership so that the U.S. and the EU can instead work together to reduce their dependence on China, which controls many of the rare earth metals that are needed for this clean energy transition. And this will also be high on the agenda in today's meeting.
MARTÍNEZ: All right. We're going to hear more about that later today. That's NPR's Rob Schmitz joining us from Berlin. Rob, thanks.
SCHMITZ: Thank you. Transcript provided by NPR, Copyright NPR.
