Tue | Sep 27, 2022

EU says US electric vehicle tax credit could break WTO rules

Published:Thursday | August 11, 2022 | 12:57 PM
The 2024 Chevrolet SS EV is shown in Warren, Michigan, Tuesday, July 12, 2022. The European Union expressed concern Thursday, August 11, 2022, that a new US tax credit plan aimed at encouraging Americans to buy electric vehicles would discriminate against European producers and break World Trade Organization rules. (AP Photo/Paul Sancya, File)

BRUSSELS (AP) — The European Union expressed concern Thursday that a new United States tax credit plan aimed at encouraging Americans to buy electric vehicles would discriminate against European producers and break World Trade Organization rules.

Under the Inflation Reduction Act nearing final approval in the US Congress, a tax credit of up to $7,500 could be granted to lower the cost of an electric vehicle.

To qualify, the bill requires that electric vehicles should contain a battery built in North America with minerals mined or recycled on 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 US producers.”

“Of course this would mean that it would be incompatible with the WTO,” she said.

The commission is the EU's executive branch, and part of its responsibilities is to conduct trade with the outside world on behalf of the bloc's 27 nations.

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.

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