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U.S., EU to Coordinate on Semiconductor Subsidy Programs

U.S. and European Union officials have agreed to work together to strengthen semiconductor supply chains, including by disclosing information on respective subsidy programs to boost chip production, according to The Wall Street Journal (subscription). 

What’s happening: At a meeting at the University of Maryland on Monday, the U.S. and EU “stressed concrete achievements made through the [U.S.–EU Trade and Technology Council] framework, including the agreement on semiconductor supply chains, an area where both sides are accelerating efforts to beef up their domestic industries to cut reliance on Asian suppliers.”

  • The creation of the TTC is part of the Biden administration’s effort to strengthen U.S. relationships with allies and bolster supply chain resiliency.

Why it’s important: “Earlier this year, the U.S. passed the CHIPS Act, a $280-billion legislation to provide subsidies and support for research and development to increase domestic production. The European Union introduced similar legislation, raising concerns that global semiconductor companies may pit one against the other to get better deals or create oversupplies in the long run.”

  • The Commerce Department and European Commission have set up a common mechanism for support-program information sharing and will implement an early-warning system to combat supply chain disruptions.

The backdrop: The U.S. and EU officials met as the South Korean, Japanese and some European governments put pressure on the Biden administration to address their concerns that a U.S. electric-vehicle subsidy program guideline, slated for a Jan. 1 rollout, discriminates against their countries’ companies.   

  • “European Commission President Ursula von der Leyen said … there is a risk the U.S. legislation could lead to unfair competition and fragment supply chains that were already tested by the Covid-19 pandemic.”

And AI, too: At the Maryland meeting, the U.S. and EU also discussed a new plan to evaluate “artificial intelligence and associated risks and developing common standards for charging systems for heavy-duty electric vehicles.”  

The NAM says: “Manufacturers welcome U.S.–EU engagement on issues related to semiconductors,” said NAM International Trade Policy Director Maria Sierra. “An early-warning system will help combat supply chain disruptions and ensure the availability of these critical products for our industry.”

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