New Secretary of State pushes back on U.S. tax credit plan for electric cars

Secretary of State Mélanie Joly will meet with US Secretary of State Antony Blinken at the State Department in Washington on November 12.OLIVIER DOULIERY / AFP / Getty Images

Secretary of State Mélanie Joly strongly protested against a U.S. proposal to offer tax deductions to people who buy electric vehicles assembled in the United States at her first meeting with U.S. Secretary of State Antony Blinken.

Ms. Joly traveled to Washington last Friday to speak with Biden’s administration’s top foreign policy adviser ahead of next week’s summit of the three North American leaders. The proposal for a tax deduction is expected to be a central topic of debate at the summit, known as the three amigos.

US President Joe Biden is meeting with Prime Minister Justin Trudeau and Mexican President Andres Manuel Lopez Obrador on November 18 in Washington amid growing concerns about US protectionism. This is the first meeting between the Three Amigos since Donald Trump became president in 2017.

The Canadian and Mexican governments are concerned that the proposed U.S. tax deduction could disrupt the future of electric vehicle production in their countries because car companies may shift production to the United States. They also say it would undermine the auto provisions of the renegotiated trilateral trade pact, now known as the US-Mexico-Canada agreement, which promises equal terms for the sector in all three countries.

Given the integrated nature of the North American automotive industry, Ms. Joly warned that any American movement would also be bad for Americans because many American-made vehicles and auto parts for export are assembled in part in Canada.

“Thousands of jobs on both sides of the border depend on the integration of this supply chain,” she told reporters after the meeting. “We will continue to ensure that this is well known throughout the administration, but also throughout Congress.”

The prime minister is expected to take up the message with congressional and U.S. business leaders when he is in Washington next week.

In a recent letter to Democrats and Republican leaders in the U.S. Senate and House of Representatives, Commerce Secretary Mary Ng wrote that giving thousands of dollars in tax deductions solely to vehicles assembled in the United States would cause “serious and irreparable damage to the Canadian auto industry.” sector.”

Ms. Joly also pointed out that Canada has one of the world’s largest reserves of minerals required for electric vehicles and that the United States would need these minerals when car production shifts from gas to battery powered.

“That way, we have a lot to gain by working together,” she said. “Canadians know we have to defend our interests and we can never take anything for granted.”

A panel in the U.S. House approved legislation in September that would increase existing tax deductions for electric vehicles. The new credits will include $ 4,500 for each Union-made vehicle manufactured in the United States and $ 500 for each U.S.-made vehicle battery. In total, each vehicle would be eligible for up to US $ 12,500 in credits.

The proposal is part of Mr. Bidens Build Back Better $ 1.75 trillion legislation, which includes significant social spending and climate change initiatives.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association of Canada, recently told The Globe and Mail that credits would also hurt U.S. companies that produce one million cars in Canada each year by using 50 percent U.S. parts and 60 percent. cents US commodities.

The honor is opposed by West Virginia Senator Joe Manchin, an influential and moderate Democrat. The Biden administration is counting on Mr. Manchin’s vote to get the bill through an equally divided Senate. He has said it is “not American” to use tax dollars to pick winners and losers.

Mr. Trudeau and his Mexican counterpart are also expected to object to Mr. Bidens Buy American proposal for US infrastructure projects.

Ms. Joly also spoke with Mr Blinken about the serious situation in Afghanistan, which is facing food shortages due to the collapse of the economy since the Taliban took over in early August. She said Canada is determined to bring in 40,000 Afghan refugees and work with NGOs and neighboring countries to help them get out of Afghanistan.

With a report from Steven Chase

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