The Canadian government on Friday sent a letter to nearly a dozen senior U.S. officials expressing dismay at an idea being considered in a key U.S. budget bill. As CBC News reported last week, Canadian officials have expressed concern over a Buy American-type proposal that they believe could disrupt the auto industry.
Now Ottawa has put these views in writing to the congressional leadership of both parties, other key members of Congress and two senior officials.
“Very serious concerns”
The letter from Canadian Minister of International Trade, Mary Ng, expressed several concerns – about a historic decline in Canada-US auto cooperation; tens of thousands of jobs lost in Canada; and collateral damage to US auto workers involved in cross-border auto trade.
“I am writing to convey Canada’s very serious concerns,” Ng said in the letter.
“This proposal would undermine decades of cooperation between the United States and Canada to foster mutually beneficial integrated automotive production and supply chain. …
“If adopted, these credits would have a major negative impact on the future of [electric vehicle] and auto production in Canada, posing the risk of serious economic damage and tens of thousands of job losses in one of Canada’s largest manufacturing sectors. American businesses and workers would not be isolated from these impacts. “
At stake is the massive budget bill that forms the core of US President Joe Biden’s national agenda.
Electric vehicle credits worry Ottawa
Democrats hope to strike a deal between themselves to pass a bill with around $ 2 trillion in initiatives on climate change, child care, parental leave and health care.
They want a deal soon – before Biden goes to the Glasgow climate summit which is due to start on October 31 – and they want to have legislative progress they can show voters ahead of a series of elections at the level of the United States. ‘Status on November 2.
One of the main climatic provisions envisaged concerns incentives for the purchase of electric vehicles.
Under various proposals in the House of Representatives and the Senate, Democrats are reportedly offering $ 12,500 in tax credits to people who buy an electric vehicle.
What has upset Ottawa and the Canadian auto industry are provisions that would reserve part of this credit strictly for vehicles assembled in the United States.
In five years, the entire $ 12,500 credit would only apply to cars assembled in the United States.
What worries Ottawa most is the timing: Companies are now making investment decisions about where to build electric vehicles, and they fear this tax credit will drive investors away from Canada.
Possibility of commercial retaliation
Ng’s letter alludes to the possibility of commercial retaliation. He says the proposal violates US commitments under the New North American Trade Agreement and World Trade Organization rules.
She also says it flies in the face of US commitments to work with Canada to develop electric vehicles and extract the essential minerals used to build them.
The reason much of the president’s agenda rests on this bill alone is that budget legislation has the best chance of being passed by Congress.
Budget bills can be passed by the Senate by simple majority vote through a process known as reconciliation, and this omnibus package could become law once all Democrats vote for it.
Ng’s letter was sent to House of Representatives and Senate leaders Nancy Pelosi and Chuck Schumer, as well as senior Republicans in both chambers, key committee heads and trade and commerce secretaries in Biden.