PRAGUE (Reuters) – European Union trade ministers and U.S. Trade Representative Katherine Tai were holding talks in Prague on Monday to discuss how to deal with U.S. legislation that the EU sees as discriminating against its electric car-makers.
The ministers were also looking at extending trade support for Ukraine and hope that a trade deal with Latin American countries moves forward following Brazil’s presidential election, the ministers said on entering the talks.
Non-U.S. car makers have been angered by the U.S. $430 billion “Inflation Reduction Act” from August which is aimed at fighting climate change and making Washington a world leader in the electric vehicle market.
The U.S. law says that electric vehicles have to be assembled in North America to qualify for tax credits. The EU says this discriminates against EU-made cars and U.S. vehicles sold in Europe enjoy the same tax breaks as European ones.
The EU and United States have set up a task force to deal with the issue and Tai was taking part in the Prague meeting to discuss it.
“We are all in all on a positive track and it is very important we are cooperating closely between the EU and the United States as strategic allies, especially in the situation we are facing right now,” European Commission Vice President Valdis Dombrovskis, responsible for trade, said ahead of the meeting in the context of Russia’s invasion of Ukraine.
“There are also concerns related to the Inflation Reduction Act and its discriminatory provisions. In this regard we have set up an EU-U.S. task force to deal with these issues.”
Czech Industry and Trade Minister Jozef Sikela said there was no deadline for the talks but the current status was unacceptable for Europe.
“I will be pretty frank. I think in the form it was presented, I think for the European Union it is unacceptable. And we simply expect we will get the same status as Canada and Mexico,” Sikela told reporters.
Sikela said the victory of Brazilian leftist leader Luiz Inacio Lula da Silva in a presidential election on Sunday could help move ahead talks with South America’s Mercosur bloc on a stalled trade agreement.
(Reporting by Jan Lopatka; Editing by Nick Macfie)
