In a stunning display of economic prowess and determination, France has delivered a resounding message to both the European Union and the United States.
More than 200 international business leaders gathered at the opulent Palace of Versailles for the grand event known as Choose France, which showcased the country’s commitment to attracting foreign investment and asserting its dominance in the global economic landscape.
“France is changing, is getting adapted to the course of the world and I believe that we’re following the right path, which is to reindustrialise the country, to be more sovereign and more respectful of the climate and biodiversity,” Macron said during a visit to Dunkirk, in northern France.
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Macron announced two major investments, both in the battery sector: one worth 5.2 billion euros ($5.7 billion) by Taiwanese group Prologium, the other one via a joint venture of China’s XTC with French energy giant Orano worth 1.5 billion euros ($1.6 billion). They are expected to create 3,000 and 1,700 jobs in the area respectively by 2030.
Background: The Challenge Posed by the Inflation Reduction Act
The stage for this bold move was set by the United States’ Inflation Reduction Act, introduced in August 2022. The legislation sparked outrage among European nations, as it favored electric vehicles assembled exclusively in North America, contravening international trade laws and jeopardizing the burgeoning economic relationships with the US.
The Automobile Industry: A Vital Pillar of European Economy
The Inflation Reduction Act carries significant implications for the European automobile industry, which has a profound economic multiplier effect. Beyond the automotive sector itself, it has far-reaching impacts on downstream businesses such as ICT, maintenance, and mobility services, as well as upstream industries like steel, chemicals, and textiles. With an estimated 13.8 million jobs dependent on the EU automotive sector, any threat to its stability poses a grave concern.
Europe’s Battle to Retain Businesses and Prevent a Trade War
Even prior to the introduction of the Inflation Reduction Act, Europe had been grappling with the loss of businesses to the United States. Prominent companies, including Volkswagen, jewelry giant Pandora A/S, and steel manufacturer Arcelor Mittal SA, had announced expansions in the US, signaling a worrying trend. The exodus of German firms to the US, as reported by German daily Handelsblatt, further exacerbated the concerns.
France’s Stern Rejoinder to the US
However, France has chosen to take a different path. The recent Choose France event at the illustrious Palace of Versailles showcased the nation’s determination to stand firm against the US’ attempts to undermine Europe’s business landscape. With a resounding declaration, more than 200 international business leaders gathered to witness France’s commitment to attracting foreign investment.
A Show of Strength and Innovation
The event was not just about rhetoric; France backed up its words with concrete plans. President Emmanuel Macron announced a staggering 13 billion euros in investments through 28 initiatives, several of which were unveiled recently. Macron’s government has also introduced a series of incentives to support innovative industries and promote the transition towards greener technologies. These incentives include tax credits in fields like battery production, electric cars, hydrogen, and wind power, as well as streamlining the authorization process for industrial projects.
France’s Vision: Reindustrialization, Sovereignty, and Environmental Responsibility
President Macron, during a visit to Dunkirk, expressed his belief that France is on the right path, adapting to the changing world. Macron’s move comes at a time when his government faces challenges, with protests against his decision to raise the retirement age undermining his economic strategy.
Implications: A New Economic War on the Horizon
With this summit of business titans and the resolute stance taken by France, a new economic war is emerging—one that pits France against the United States. France’s message to the EU is clear: it will not stand idly by as its businesses are lured away, and it demands equal treatment and fair competition. Should the US fail to make concessions, a trade war between the two transatlantic allies may become inevitable, leading to potentially disastrous consequences for the global economy.
France’s response to this threat is admirable and commendable, as it shows a willingness to fight back against unjust policies that are not only against international trade laws but also against the values of fairness, cooperation, and respect.
So, let’s brace ourselves for another trade war.
