Commission tries to kill discriminatory car scrappage bill

Publication date: 29 April 2009

As the US Congress considers a bill that gives car buyers a US$3000-US$5000 subsidy if they trade their gas-guzzling vehicle in for a fuel efficient one, the European Commission is objecting to the exclusion of EU-assembled cars from the scheme.

The EU Ambassador in Washington John Bruton, has written to Congress telling it the bill violates Articles III(4) and I(2) of the General Agreement on Tariffs and
Trade (GATT) by which the US is bound.

One EU source told Europolitics they were hopeful of getting the bill amended as lawmakers were drafting a compromise that will not have the discriminatory clause.

The bill introduced by Representative Betty Sutton (Democrat, Ohio), on March 17, only gives the car scrappage voucher to people who buy vehicles assembled in the US, Canada or Mexico. It only covers cars whose retail price is under US$35,000, which the Commission also opposes, saying it excludes premium, energy efficient European
vehicles. In the US Senate, which would have to jointly agree the scheme with the House, a parallel bill from Senator Diane Feinstein (Democrat, California) is causing concern as the fuel efficiency standard vehicles must meet to be covered by it may also exclude EU-made vehicles.

With Congressmen Ed Markey and Henry Waxman drafting a compromise that may supersede the other bills, the Commission is lobbying intensely to ensure it does not
contain protectionist provisions.

Although 13 EU member states have similar car scrappage schemes, the Commission has given them the green light because they do not require the replacement vehicle to be made in a specific country or region. The US bill also allows the voucher to be used to buy passes on public bus and rail transit systems.

Source: Europolitics