President Joe Biden was recently faced with a difficult choice on his own: a continued good neighbor policy under the rules of the United States-Mexico-Canada trade agreement, or the continuation of its policies of American purchase incorporated into the infrastructure bill it enacted. Nov. 15 and in pending $ 1.75 trillion “Build Better” legislation.
There are some interesting programs in Build Back Better, but like any gargantuan measure, it also includes some problematic propositions.
One particularly egregious provision in the pending legislation would provide an additional tax credit of $ 4,500 for electric vehicles manufactured by union auto workers in the United States.
This provision would not only be bad for Canada and Mexico, it would discriminate against autoworkers in South Carolina and many other states and drew strong complaints from Tesla and other automakers. non-unionized.
Mr. Biden’s recent summit meeting with Canadian Prime Minister Justin Trudeau and Mexican President Andrés Manuel López Obrador sadly ignored these issues. Build Back Better was passed by the House, but hopefully the Senate will take a smarter approach and remove the pro-union subsidy.
Buyers of electric vehicles are already eligible for a tax credit, but the only fully unionized U.S. automakers are Ford and General Motors.
The proposed additional tax credit would give these automakers an unfair competitive advantage – unfairly granted by the federal government – over non-union automakers such as BMW, Volvo and Mercedes in South Carolina.
Mexico and Canada are two of our largest trading partners, and the auto industries of all three countries are closely linked with auto parts from hundreds of suppliers crossing their borders.
Canada and Mexico continue to oppose the pro-union provision, with Canadian officials saying they will challenge the additional tax credit as a violation of the US-Mexico-Canada agreement.
In retaliation, under the rules of the trade agreement, Mexico and Canada could impose tariffs on American goods, and the trade dispute could spill over into other areas where the United States needs the good. will and cooperation of their neighbors.
These areas include a joint policy on trade with China and Mexico’s willingness to help curb illegal immigration to the United States.
Business leaders from all three countries have rightly raised concerns about the pro-union proposal, and the three countries have continued discussions since the summit meeting. So there is still hope that the provision will be removed from Build Back Better.
The government needs to be very careful when it comes to picking winners and losers, especially when those choices fall within such clearly partisan lines.
And with the US economy trying to regain its foothold from the damage caused by the pandemic, and COVID-19 continuing to rock the country, it also makes sense to avoid any self-inflicted injury.