International outrage over the Inflation Reduction Act continues as the European Union is asking the United States to treat electric vehicles and batteries built by member countries the same as those made in Canada and Mexico.
According to Reuters, that’s the message following a meeting between EU trade ministers and U.S. Trade Representative Katherine Tai. While details about the talks are vague, Czech trade minister Jozef Sikela reportedly said both sides have shown a willingness to make a deal.
The European Union is seeking the same treatment as Canada and Mexico, but Sikela said “We have to be realistic and see what we can negotiate.” As part of that effort, a joint taskforce will meet later this week to discuss the issue and seek possible solutions.
While the EU is looking to strike a deal, it appears retaliatory measures are on the table as EU Trade Commissioner Valdis Dombrovskis said, “We are focusing on a negotiated solution before we move on to other considerations.” It remains unclear what those considerations could be, but officials have previously called the revamped tax credits discriminatory and a violation of World Trade Organization rules.
South Korean and European Union officials have routinely expressed anger at the Inflation Reduction Act as it favors North American sourcing, production, and assembly of electric vehicles and their batteries. The percentage requirements get stricter over time and this would effectively force foreign automakers to invest in North America in order to qualify for tax credits. This is a drastic change from the previous tax credit, which treated models equally and didn’t have sourcing requirements.
