The European Union said on Thursday it was “deeply concerned” about proposed tax credits for purchases of electric vehicles in the United States because they would be biased against foreign producers and may breach World Trade Organization (WTO) rules.
Under a provision of the $430 billion climate and energy bill that was passed by the Senate on Sunday, U.S. buyers of zero-emissions electric vehicles (EVs) would be eligible for tax credits worth several thousand dollars.
However, domestic content conditions would apply to the tax breaks to push the EV industry away from reliance on China and spur local investment in battery minerals and manufacturing.
“We think it’s discriminatory, that it is discriminating against foreign producers in relation to U.S. producers,” said European Commission spokesperson Miriam Garcia Ferrer. “Of course this would mean that it would be incompatible with the WTO.”
Garcia Ferrer told a news briefing the EU agreed with Washington that tax credits are an important incentive to drive demand for EVs and promote the transition to sustainable transport and a reduction in greenhouse gas emissions.