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EU-N. Korea: Potential violation of WTO rules by US tax breaks for the purchase of electric vehicles

The European Union and South Korea have raised concerns over proposed US tax breaks for the electric vehicle market, saying they could discriminate against vehicles made outside the US market and violate World Trade Organization (WTO) rules. .

With the $430 billion climate and energy bill passed Sunday by the Senate, Congress will lift the $7,500 cap on tax credits for electric vehicle purchases that currently apply, imposing restrictions including banning vehicles not manufactured in North America from receiving tax breaks.

The ban on tax breaks for vehicles made outside of North America will take effect once President Biden signs the bill into US law.

The proposed legislation also includes provisions aimed at preventing the use of battery components or rare earths originating in China.

“In our view there is discrimination against foreign vehicle manufacturers compared to manufacturers in the US,” said European Commission spokeswoman Miriam Garcia Ferrer. “Of course that means it will not be WTO compatible.”

García Ferrer said in a briefing that the EU agreed with Washington that tax exemptions are an important incentive to boost demand for electric vehicles, promote the transition to sustainable means of transport and reduce emissions of harmful pollutants.

“However, it is necessary to ensure that the instruments introduced are fair and non-discriminatory. Thus, we continue to urge the US to remove the discriminatory elements from the bill and ensure that it is fully WTO compliant,” said same.

South Korea also said on Thursday that it had raised concerns with the US that the bill could potentially violate WTO rules, as well as a bilateral free trade agreement. South Korea’s trade ministry said in a statement that it has asked US trade authorities to ease requirements on battery components and the final assembly of vehicles.

The bill in question is expected to be voted on today by the House of Representatives, according to a previous statement by the speaker of that legislative body, Democrat Nancy Pelosi.


Source: Capital

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