(CN) — European Commission President Ursula von der Leyen headed to the White House on Friday to hammer out new economic and political deals to strengthen the transatlantic alliance against Russia and China.
Von der Leyen's trip to meet U.S. President Joe Biden comes amid escalating tensions between the West and China and the devastation of the war in Ukraine.
The possibility of a major rupture with China is growing as U.S. intelligence agencies warn that Beijing is preparing to provide weapons to Russia for the war in Ukraine. European Union leaders have warned China of severe repercussions and the imposition of sanctions if it sends weapons to Russia.
With the growing prospect of conflict erupting between the West and Beijing, the U.S. and EU are setting out to make their economies less dependent on the Asian superpower by building new supply chains that don't pass through China.
Countering China was to be at the center of Friday's talks at the White House, American and European media reported. Von der Leyen's White House visit comes a week after German Chancellor Olaf Scholz met Biden in Washington to discuss the war in Ukraine and the threat posed by China.
No major deals were expected to be announced on Friday, media reported. Still, both sides appear to be making progress on lessening discord on some contentious economic issues, in particular over European anger at a major “American-made” subsidy program set up with the recently passed U.S. Inflation Reduction Act.
The legislation paves the way to ramp up American production of its green energy sector, but EU leaders are worried European countries will be lured away to the U.S. to take advantage of the subsidies and by cheap American energy costs.
European leaders are upset at the U.S. law because it stipulates companies can receive the massive tax breaks and subsidies only if they source their materials almost entirely in the U.S. – the “buy American” component in the legislation.
The EU has responded with its own subsidy proposals that could see a loosening of restrictions on state aid that individual governments can award businesses. These proposals, though, are contentious within the EU because richer countries like Germany and France could outspend less wealthy countries and give their companies an unfair advantage. A core tenet to the EU economic system is that businesses in all 27 member states should compete on a level playing field where government intervention is heavily restricted.
To ease tensions over the Inflation Reduction Act, EU and American negotiators are discussing a special exemption that could give EU companies the same access to some tax credits and subsidies the U.S. is offering free-trade partners like Canada and Mexico.
Biden and Von der Leyen also are expected to discuss breaking the dominance China has over the production of raw materials and rare minerals needed for many high-tech products such as electric car batteries, computers and solar panels.
Earlier in the week, Von der Leyen visited Canada where she talked about Europe's need for such resources.
“China produces 98% of Europe’s supplies of rare earths,” she said. “Europe needs to de-risk this dependency.”
The EU has begun to align itself with the U.S. on countering China despite concerns that doing so could upset the Asian superpower. China is a massive market for European goods.
This month, EU institutions – the European Commission, European Council and European Parliament– banned the use of Chinese-owned TikTok on all work-related devices. The move comes as the Biden administration considers a nationwide ban on TikTok over allegations that users' data is being given to the Chinese government and that the video-sharing app poses a national security threat.
Meanwhile, the Netherlands said recently it will block the sale of advanced microchip technology to China to protect national security, a move that follows a similar U.S. ban. Germany is considering to stop using technology from Chinese giants Huawei and ZTE.
Courthouse News reporter Cain Burdeau is based in the European Union.
Follow @cainburdeau
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