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Proposed US EV Incentives Have Created A Storm Of International Outrage

The Democrats’ EV incentive proposal could violate international law.

Joe Biden wants to push the EV revolution forward. That’s a good thing. But how to do that has become a contentious debate in the hallowed halls of Congress, where legislative action is dictated primarily by promises of future campaign contributions made by highly paid lobbyists for special interests.

Senator Joe Manchin, the plutocrat from West (By God) Virginia who shudders at the thought of paid family leave for ordinary Americans but warmly embraces enormous tax breaks for wealthy corporations and individuals (like himself), fulminated last week that no one subsidized the construction of gas stations back when Henry Ford started building his Model T, so why in tarnation should taxpayers subsidize the expansion of EV charging networks today?

The current EV tax credit program began 15 years ago — long before the first Tesla or Nissan LEAF hit the road. As amended, it limits the credit to the first 200,000 plug-in hybrid and 100% electric cars sold by each manufacturer. Tesla and GM have long since passed that 200,000 mark. Ford and Nissan are both getting close to it.

The credit itself has always had a built-in bias toward wealthy drivers. In order to get the full benefit, the buyer must actually owe $7,500 in federal taxes. If, for example, a buyer only owes $3,000 in federal taxes, $3,000 is the maximum credit available. People who owe no federal taxes get bupkes. Many critics have suggested if the goal is to move as many EVs as possible out of showrooms and onto the streets, it would be smarter to simply offer a rebate at the time of sale rather than making people wait until April 15 of the following year.

The current proposal (which has not passed either of the houses of Congress and may never become law) would make the rebate higher if a vehicle is manufactured in America by American workers, and higher still if those workers are part of a labor union. For a comprehensive review of existing and proposed federal EV incentives, please see this article by CNET Road Show.

The proposal has gotten everyone up in arms. What should be a slam dunk has suddenly mutated into a toxic stew that no one is happy with. The other day, Zachary Shahan, CleanTechnica’s exalted grand poohbah, wrote a story in which he lamented that some Tesla supporters — who currently get nothing by way of a federal incentive if they purchase a Tesla — are unhappy that they will now get something but less than buyers of cars manufactured by GM, Ford, and Dodge/Chrysler/Jeep might get.

They should say thank you for getting 4/5ths of a loaf instead of no crumbs at all and stop whining that others are getting a slice or two more, Zachary suggests. Don’t worry, be happy. It’s all good and the EV revolution will get a major boost. What’s not to like?

The Nations Of The World Unite

As it turns out, there are quite a lot of other people who are upset by the pending legislation. Every automaker whose workers are not unionized is opposed to the idea, but the fun doesn’t stop there. According to Reuters, ambassadors from the European Union, Germany, Canada, Japan, Mexico, France, South Korea, Italy, Poland, Sweden, Spain, Austria, Netherlands, Belgium, Cyprus, Ireland, Malta, Finland, Romania, and Greece have all signed a joint letter addressed to U.S. lawmakers saying a proposed U.S. electric vehicle tax credit violates international trade rules.

The letter warns that “limiting eligibility for the credit to vehicles based on their U.S. domestic assembly and local content is inconsistent with U.S. commitments made under WTO multilateral agreements.” The proposed legislation “would violate international trade rules, disadvantage hard-working Americans employed by these automakers, and undermine the efforts of these automakers to expand the U.S. EV consumer market to achieve the administration’s climate goals.” The new law “puts U.S. trading partners at a disadvantage,” the letter said.

Reuters points out that the majority of auto workers in the countries whose ambassadors wrote the letter are unionized. “Our governments support workers’ right to organize. It is a fundamental right and should not be used in the framework of tax incentives, setting aside the opportunities for nearly half of America autoworkers,” the ambassadors wrote.

In the past few days, both Canada and Mexico have expressed their own displeasure with the proposal. The Ford Mustang Mach-E is manufactured in Mexico and GM will make its Bright Drop electric delivery vans in Canada.

UAW President Ray Curry said the provision will “create and preserve tens of thousands of UAW members’ jobs” and “would be a win for auto manufacturing workers.”

[Note: Try as I might, I was unable to find a link to the actual letter. Although there are multiple stories about it on the internet, they all link back to the Reuters story. If any readers are able to access the original letter, please share the link with the CleanTechnica community in a comment.]

Globalism And Its Discontents

What’s happening here? A lot, actually. For the past 50 years, nations have been only too happy to give up their sovereignty to multinational corporations in order to benefit from the new world economic order. It was convenient to pretend that wealthy nations could outsource their production needs to low-wage workers in other countries without any harmful side effects.

It’s what made Walmart great — miles of aisles filled with merchandise made in Mexico, Sri Lanka, China, Taiwan, Vietnam, or Bangladesh. Soon, manufacturers in every economic sector were discovering they could boost profits by moving their production facilities overseas. All it took was millions of shipping containers and hundreds of huge ships to transport them to and from the ports of the world.

The World Trade Organization became a de facto international government with more power than the United Nations and the ability to overrule national trade policies that conflict with global priorities. There is a very real possibility the proposed EV incentives could be invalidated by the WTO, if they become law.

Globalization at all costs has put the nations of the world in a position where they cannot pursue economic policies they deem to be in their national interest if they cause economic harm to someone else half a world away. It has diminished the sovereign power of individuals while creating a new class of super citizens — multinational corporations.

The US has been a fierce proponent of globalization and the WTO, but now the monster it helped create is in a position to flex its muscles and demand the US subordinate its national interests to the wishes of the global community. What a bitter pill that is going to be to swallow. The situation is not made any more palatable by the knowledge that over the past 40 years, many other nations have had to knuckle under to the demands of those who built the free trade system in the first place.

The Biden Brigade may have just painted themselves into a corner with no way out. But in a world where corporations have more power than people, no one should have expected anything less.

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Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. 3000 years ago, Socrates said, "The secret to change is to focus all of your energy not on fighting the old but on building the new." Perhaps it's time we listened?


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