Mexico analyzes commercial retaliation to the US for electric cars

The head of the Ministry of Economy, Tatiana Clouthier, revealed that from the government of Mexico they contemplate starting business retaliation under the T-MEC and the World Trade Organization (WTO) against USA if the Congress of that country approves the initiative “Build Back Better”, which contemplates giving tax credits for electric vehicles.

In a press videoconference, the federal official said that the Ministry of Economy has some concerns about the possibility that the United States Congress approve a new tax credit for electric vehicles as part of said initiative approved on November 19 in the House of Representatives and which is now being considered in the Senate.

“To defend our Automotive industry and regional commitment, we would retaliate commercially, We would do that why, because it is not valid, it is not valid that we are playing to be partners when it suits me and when I do not apply to you through the dark way, “he said.

We are talking that this measure would take effect in 2027, where it becomes important to see, it is not a capital flight, it could generate the movement of plants, then as it is for 2027, it is like a planning where they are giving them the carrot for the future, to say it is convenient for you to go back ”He added.

The official explained that in its current wording the initiative is inconsistent with the obligations of the United States in the T-MEC and with the WTO agreements, Furthermore, he said, it goes against the spirit of North American productive integration.

He explained that said initiative contains a proposal to grant a tax credit amount, which can reach up to $ 12,500 for electric vehicles assembled in the United States, and that meet minimum domestic content criteria, additionally $ 500 more for batteries made in the same country, and establishes that as of 2027, only electric vehicles manufactured in the US may be eligible to access any of the amounts of the tax credit.

“We want to make it very clear that in the event that the proposal is approved and implemented in said tax credits by United States Mexico It will resort to legal instruments at its disposal to enforce our rights ”, the official highlighted.

In that sense, he stated that This measure is discriminatory against Mexican exports of electric vehicles and would put them at a disadvantage compared to vehicles produced in the United States.An issue that he said contravenes the purpose of the T-MEC, and considered that this tax credit proposal would reduce the competitiveness of the North American automotive sector.

“In terms of the T-MEC, yes, we would initiate the processes that we have followed in others … we are evaluating all kinds of retaliation, it is not the first time that we have made decisions of this nature, and we would be doing the same in this way ”, assured Clouthier.

He recalled that previously Mexico has imposed tariffs: “we would have to do or propose something very important and strategic for, in those products, in those places where it also hurts, to give precision shots, so that the consequences can be felt. It is not desirable when we want to build a strong North America to be in the face of world circumstances ”.

He indicated that the Mexican government is giving a timely follow-up to the initiative, for which they have made various calls to the US Congress and their government counterparts to point out that the proposal, “is in violation of the commitments signed in the T-MEC and in the WTO ”.

“Apparently The initiative will be discussed in the US Senate on the 13th.That is why we are beginning 10 days of constant activity to make the congressmen see the circumstance that this presents, and the consequences that this act may lead. These 10 days will be to contact each of the senators that we consider has a position or a decision-making position”, He said.

The undersecretary of Foreign Trade, Luz María de la Mora, pointed out that it is an issue that they will be evaluating with Mexico’s partners in the WTO, such as Canada, Japan, South Korea, the European Union, Germanya, among others, who have seen that the initiative is a measure that could turn out to be contrary to the US obligations in the WTO.

“It could be marked as a performance requirement, which is prohibited. The type of tax credit that is being proposed, conditions this tax credit to the final assembly of the electronic vehicle in US facilities that operate under a unionized collective bargaining agreement, and is also considering that the components and parts of the vehicle contain at least 50 percent. percent of domestic content. These conditions are prohibited in the WTO ”, he commented.

Effects on Mexico

Tatiana Clouthier stated that the consequences of a proposal of this nature towards Mexico would be in the Gross Domestic Product (GDP) that represents the sector, job losses and above all, would go against the anti-migrant measures that the US seeks to implement.

“What does it represent for the Mexican State, 4 percent of GDP, a million jobs, and 25 percent of exports, I think these data are hard, we understand,” he said.

“It would exorbitantly increase the possibility of mobility for Mexican and Central American people, etc., to seek better horizons in the United States, we are not talking about population, it is essential to see the number of sources of employment that the US has open and not the it can fill with its population. There cannot be an anti-migrant strategy, when on the other hand I am doing the opposite, “he added.

MRA

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