Canada won’t resolve electric vehicle dispute with U.S. by citing new NAFTA, former ambassador says

December 3, 2021
Canada won't resolve electric vehicle dispute with U.S. by citing new NAFTA, former ambassador says
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A former U.S. ambassador to Canada says Ottawa probably won’t be able to use the new North American trade agreement to resolve a simmering dispute between the two nations.

Canada has been pushing the Biden administration and U.S. lawmakers to abandon a proposed electric vehicle purchase incentive — potentially worth up to $12,500 per car — that would apply exclusively to vehicles made in the U.S.

The proposal is part of a nearly $2 trillion social security and climate bill working its way through the U.S. government now.

“I’m not sure that this tax credit would violate the trade provisions,” Gordon Giffin told CBC’s Power & Politics. “So I don’t think that’s the hope for Canada.”

Giffin served as the U.S. ambassador to Canada from 1997 to 2001.

Canadian officials, including Deputy Prime Minister Chrystia Freeland, have said the proposed tax credit violates the new Canada-United States-Mexico Agreement, NAFTA’s replacement.

“The EV incentives, as they are currently formulated, we are certain are a violation of the new NAFTA agreement,” Freeland said during a visit to Washington last month. Freeland and Prime Minister Justin Trudeau spent much of the trip pressing President Joe Biden, as well as congressional and Senate leaders, to walk back the proposal.

Ottawa says the incentive would cause serious damage to the Canadian auto sector and disrupt the cross-border supply chains that keep vehicles rolling off assembly lines on both sides the border.

Giffin said the Canadian government’s best option for fighting the incentive would be to lobby U.S. officials — especially new ambassador David Cohen — to alter the massive and complex bill.

“No one really thought about the fact that they were side-swiping the auto industry in Canada. I hate to say it, but I just don’t think anybody thought about it,” Giffin said.

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