Tax credits for EVs to dominate EU-US trade talks

The European Union’s top trade official on Monday called for urgent steps before the end of the year to modify a US climate law that would cut off the bloc’s electric vehicles from US tax credits, calling the measure discriminatory.

This year’s $430-billion Inflation Reduction Act offers generous tax credits of $7,500 for new purchases of Tesla, Ford and other North American-made EVs, which the 27-country bloc fears will significantly hurt European automakers. EU Trade Commissioner Valdis Dombrovskis, speaking to Deutsche Welle before a meeting of the US-EU Trade and Technology Council (TTC), said the law threatened to undermine progress made by the year-old transatlantic forum.

“With all our discussions, we are in a sense making a step forward, but with the Inflation Reduction Act we’re making two steps backwards, so we need to reconcile it,” he said.

Dombrovskis said the US-EU task force was addressing the issue, but that more work was needed.

“We need to move from this engagement to concrete results and we need to do this still this year” because some of the provisions were due to kick in next year, he said.

The TTC has focused in its first two meetings on regulatory co-operation and presenting a united front against China’s non-market economic practices.

French Finance Minister Bruno Le Maire said he and German Economy Minister Robert Habeck have started talks with their US counterparts on exemption for all EU-made green products. But he also said the EU needed its own equivalent of the IRA.

European Commission head Ursula von der Leyen said on Sunday the EU would adapt its state aid rules to prevent an exodus of investment triggered by the IRA.

Published in The Express Tribune, December 6^th, 2022.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.