They see more than one violation of the T-MEC if the US approves credits

The initiative of tax credits for the purchase of electric vehicles presented by the administration of President Joe Biden opens a range of possible violations, said Eugenio Salinas, president of the Foreign Trade Commission of the Confederation of Industrial Chambers (Concamin).

From their point of view, the proposal may violate provisions on economic competition, unfair trade practices, investment or national treatment. “But until the details are released, this will be known precisely,” Salinas added.

Biden’s broader $ 1.75 trillion legislative package contains proposals to offer a $ 7,500 tax credit for electric vehicles made in the United States alone beginning in 2026.

Another $ 4,500 would correspond to tax credits for the purchase of electric cars made with union labor.

Salinas commented that it would be necessary to clarify whether those credits would be directed to the purchase of cars produced entirely in the United States or simply assembled in the United States. He also pondered that to determine at the time whether there are indeed violations by the Biden initiative, one would have to know exactly who the subsidies are directed at and what implications they have with respect to US imports.

Globally, electric car sales grew 9% year-on-year in 2019, with more than 2 million cars sold, after several years of annual sales growth of more than 40 percent.

While these represented 2.6% of global car sales, there is a growing demand for these types of vehicles, particularly as reliability increases and costs decrease. In this sense, China was the largest market in the world (1.06 million electric cars sold in 2019), followed by Europe (560,000) and the United States (326,000).

According to an investigation by the CRU consultancy, the annual production of electric vehicles would grow eight times between 2019 and 2035.

“Roughly speaking, there are laws of unfair trade practices, investment commitments and commitments in what is called national treatment, and depending on who and how the subsidy is given, issues even of economic competition may intervene,” said Salinas.

On this last point, he stated that the same US companies, those that did not receive the benefits of the subsidies, could react against it.

“You have to know the details of the proposal. What exactly would discrimination enter into? If tomorrow they say: ‘You make me a 100% American electric car.’ They cannot do it in five years, due to the series of components that are supplied from abroad ”, he added.

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Reference-www.eleconomista.com.mx

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