Washington, D.C. — Senator Tom Cotton (R-Arkansas) today introduced the No EV Credits for Idle Allies Act, legislation that would prevent European countries from benefiting from critical mineral tax credits from the United States until they contribute an equal percent of GDP in support of the war in Ukraine. Senator Bill Hagerty (R-Tennessee), Senator Marco Rubio (R-Florida), and Senator J.D. Vance (R-Ohio) are co-sponsors of the legislation.
Bill text may be found here.
“Wealthy European nations like France and Germany are reaping the benefits of American aid to Ukraine without paying their fair share for its defense. Now, these same countries are trying to secure American subsidies for electric vehicle manufacturing. France and Germany should not receive these tax credits in the first place, but certainly not until they bear an equal share of the burdens of European defense,” said Senator Cotton.
“While America continues to surpass Germany and France in support to Ukraine, these affluent nations continue to take advantage of American subsidies without stepping up to contribute an equal percentage of their GDP. I am pleased to co-sponsor legislation that will exclude Germany and France from U.S. EV tax credits until they match our commitment to Ukraine,” said Senator Hagerty.
"We cannot reward European countries like France and Germany with new and expensive subsidies for electric vehicle manufacturing while they continue to free-ride off American defense aid to Ukraine. The No EV Credits for Idle Allies Act holds these countries accountable and ensures that they contribute their fair share for the defense of Europe and to the war effort in Ukraine before receiving any tax credits. It's time for them to step up and do their part,” said Senator Rubio.
Background:
The Inflation Reduction Act (IRA) contains a $3,750 tax credit for electrical vehicles (EVs) that contain prescribed levels of critical minerals produced in the United States or in nations with which the United States has a “free trade agreement.” The European Union has aggressively protested the passage of the IRA and sought access to this tax credit.
The Biden administration may acquiesce to this demand, by claiming that the United States has a free trade agreement with the European Union, which it does not have.
However, the IRA doesn’t explicitly define “free trade agreement” in its legislative text, and as a result of this supposed error, the Biden administration claims that it does not have to abide by the traditional definition of that term.
The No EV Credits for Idle Allies Act would:
Put pressure on the Biden administration to not extend IRA subsidies to the EU.
Put pressure on Germany and France—the two wealthiest nations in Europe—to do their fair share in Ukraine.