EU says U.S. electric vehicle tax credit could break WTO rules

BRUSSELS –

Thursday’s concern by the European Union was expressed by a new U.S. tax credit Plan to encourage Americans to purchase electric vehicles would discriminate against European producers, and violate World Trade Organization rules.

Inflation Reduction Act closes to final approval in U.S. Congress. credit To lower the price of an electric car, a grant of up to US$7500 could be made. The bill stipulates that electric vehicles must be made in North America and contain minerals from the continent.

“The European Union is deeply concerned by this new, potential, trans-Atlantic trade barrier,” European Commission spokeswoman Miriam Garcia Ferrer said. “We think that it’s discriminatory, that it’s discriminating against foreign producers in relation to U.S. producers.”

“Of course this would mean that it would be incompatible with the WTO,” she said. The EU’s executive arm, the Commission, is responsible for conducting trade with the rest of the world for its 27 member countries.

The commission agrees that tax credits are “an important incentive to drive the demand for electric vehicles” and ultimately to help reduce greenhouse gas emissions. “But we need to ensure that the measures introduced are fair,” the spokeswoman said.

The U.S. requirement aims to promote domestic manufacturing and mining, to create a robust North American battery supply chain and reduce industry’s dependence upon overseas supply chains that might be affected by disruptions.

China dominates the production of lithium and other mineral that is used in EV battery production. The Democratic Republic of Congo, which is also a component of the EV battery, is the largest global producer of cobalt.

The commission is however deeply concerned by the U.S. content in the tax and the assembly requirements. credit Plan and claims that this only favors some mineral-rich countries to the disadvantage of EU products export to America.

The commission, EU Subvention Schemes saidBoth domestic and foreign producers can access these products.