Canada said the proposed US EV tax credit could hurt the sector, saying

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FILE PHOTO: The Kia Soul EV is attached to a charging station during the second press day of the North American International Auto Show in Detroit, Michigan, January 13, 2015. Reuters / Markblinch

October 22, 2021

by David Shepardson and David Ljunggren

WASHINGTON/OTTAWA (Reuters) – Canada said on Friday that a US proposal to introduce a new electric vehicle tax cut for US-manufactured cars could harm the North American auto industry and violate trade agreements. where did it go.

Separately, Canadian sources expressed confidence that a solution would eventually be reached, but that Ottawa may have to launch the challenge through a United States-Mexico-Canada (USMCA) trade agreement. Said no.

In a letter dated October 22, Canada’s Trade Minister Mary Ng told US lawmakers and the Biden administration that if the credit was approved, “it would have a major negative impact on the future of Canada’s EV and car production.” said.

She said this would increase the risk of severe economic damage and unemployment by tens of thousands in one of Canada’s largest manufacturing industries, and that American businesses and workers would not be affected by the fall. added. The automobile industries of both the countries are highly integrated.

Mr Ng said the proposed credits were inconsistent with US obligations under the USMCA and the WTO.

A Canadian government source stressed that Ottawa did not want to launch the USMCA challenge, but said it would be “considered purely a tool” if necessary. Given the sensitivity of the situation, the sources asked for anonymity.

In September, a US House panel approved a bill to increase EV credits to $12,500 per vehicle. This includes $4,500 for Union vehicles manufactured in the United States and $500 for batteries manufactured in the United States. After 2027, you must collect your vehicle in the United States to qualify for the $12,500 tax credit.

The credit will disproportionately benefit Detroit’s three big carmakers, General Motors, Ford Motor Co. and Chrysler’s parent company Stellantis.

Ontario is home to most of Canada’s automotive industry, being geographically close to American automakers in Michigan and Ohio. GM, Ford and Stelantis have announced plans to build electric vehicles at their Ontario plant.

US arms from foreign automakers have drawn criticism of tax incentives. Tesla was also important, but the tax credit is strongly supported by United Auto Workers.

Canadian officials said ministers would increase lobbying.

“I think we will eventually arrive at a solution – it just depends on what timeline. Ideally, we can change the bill before it is passed,” he said.

Mr Ng said Canada was deeply concerned about the “protective merchant element” of the proposed tax credit and discriminating against EVs and parts produced in Canada.

“Canada also needs the United States to achieve the goals of electric vehicles in the future,” she wrote, adding that Canada is the only country in the Western Hemisphere that has all the vital minerals needed to make EV batteries. I added that.

He noted that the automotive industries in the US and Canada are interdependent on both finished vehicles and parts, with a combined vehicle business of more than $100 billion annually.

(Reporting by David Shepardson of Washington and David Ljunggren of Ottawa, edited by David Goodman and Matthew Lewis)

Canada said the proposed US EV tax credit could hurt the sector, saying

Source Link Canada Proposed US EV Tax Credit Could Hurt the Sector, Saying

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