The host of the White House received Canadian Prime Minister Justin Trudeau and Mexican President Andrés Manuel Lopez Obrador on Thursday in Washington, who spoke in particular about the new angry subject.

The plan of social and environmental measures of 1.750 billion dollars wanted by Joe Biden, currently under negotiation in Congress, indeed includes a tax credit to encourage Americans to buy electric vehicles "made in USA", a provision much criticized by trade partners of the United States, particularly in North America.

Amount of $ 12,500 for electric vehicles, this credit includes the current tax deduction of up to $ 7,500, to which would be added a tax credit of $ 4,500 if the vehicle is manufactured by workers. syndicated in the United States as well as $ 500 if the battery is also American made.

The proposed financial incentives pose "a greater threat than anything Donald Trump has imposed on us" including punitive tariffs, recently said Flavio Volpe, president of the Federation of Auto Parts Manufacturers of Canada (APMA) .

The North American auto industry is highly integrated.

During the manufacturing of cars, auto parts and components cross the Mexican, US and Canadian borders several times before being assembled in one of the partner countries.

But the Biden administration clearly intends to promote unionized jobs in the United States and domestic manufacturing.

And Wednesday, visiting Detroit at General Motors, the president set the tone: "the future is electric - and it will be done here, in America", he launched, enthusiastic about the electric Hummer of the manufacturer. American.

Illegal measure?

It could, however, meet with strong opposition from the Canadian and Mexican trading partners of the United States, who argue that this tax credit proposal is akin to an unacceptable and illegal protectionist measure with regard to the free trade agreement which binds the three countries.

"We do not have the same perception" of the legal aspect, reacted Thursday Jen Psaki, spokeswoman for the White House, noting that it would not be the first time that a country has put in place financial incentives and automobile tax credits.

Canadian and Mexican officials observe that investment in the automotive sector in Canada and Mexico could shrink in the future to the benefit of the United States.

President Joe Biden and Canadian Prime Minister Justin Trudeau during a meeting at the White House on November 18, 2021 MANDEL NGAN AFP

They say it will also hurt U.S. suppliers to Canadian or Mexican factories and seriously disrupt the now perfectly choreographed supply chains between the three countries.

Canadian Trade Minister Mary Ng warned on Oct. 22, in a letter to Congress and US Trade Representative Katherine Tai, that the move could undermine the current functioning of the North American auto industry.

"If passed, these tax credits would have a major negative impact on the future of electric vehicle and automotive production in Canada, posing the risk of serious economic damage and tens of thousands of job losses in Canada. one of the largest manufacturing sectors in Canada, ”she lamented.

According to her, "American businesses and workers would not be spared from these impacts."

The Canadian minister also considers these provisions incompatible with the obligations of the United States under the USMCA trade agreement and the rules of the World Trade Organization.

Mexican Ambassador to the United States Esteban Moctezuma Barragan, along with some 20 other ambassadors, argued in a letter to the US Congress that the tax credit "would conflict with the purpose of the deployment. rapid new sustainable technologies "because it would only apply to two US vehicles out of the more than 50 electric vehicles currently available.

"I am aware of the concerns that our business partners have raised, and we are concerned about these concerns," Katherine Tai told reporters last week.

But she also stressed that she shared Joe Biden's ambition to "place the United States in the best conditions to be competitive in order to achieve its objectives and meet the industrial challenges" to come.

"All diplomatic relations have areas where there are difficult topics to discuss (...) This is the purpose of these face-to-face meetings," Jen Psaki commented on Thursday.

For Canada, the stakes are high given the importance of the sector, which represents 135,000 direct jobs and more than 500,000 indirect jobs.

© 2021 AFP