Bill That Would Tighten EV Supply Chain Rules for Chinese Inputs Passes House
A bill that would effectively overrule the Treasury Department's implementation of the foreign entity of concern restrictions for battery components and critical minerals in electric vehicle tax credits passed the House of Representatives Sept. 12 by a vote of 217-192.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The Treasury's rule, which makes either $3,750 or all of the consumer tax credit unavailable, even for EVs assembled in North America, says that certain low-value battery materials aren't traceable, and therefore there needs to be a transition period.
House Ways and Means Committee Chairman Jason Smith, R- Mo., says the bill, called the End Chinese Dominance of Electric Vehicles in America Act, fixed the regulations, which he said on the floor were "insulting to every American who cares about national security and who doesn’t want to see their tax dollars flow to China."
Rep. Carol Miller, R-W.Va., the bill's author, said allowing low-value materials to come from China "is devastating for American manufacturers and our national security."
The bill garnered the support of seven Democrats; five of the seven are "frontliners," or Democrats in districts that the party says are most vulnerable to being lost to Republican challengers.
Miller's bill also forbids licensing agreements with Chinese firms. The Treasury rule (see 2312010005) didn't make clear how U.S. firms licensing designs from Chinese firms would be treated. Congress was critical of Ford's decision to use CATL technology in its Michigan battery plant; "this legislation is needed to expand the [foreign entity of concern] limitations to prevent batteries designed, manufactured, or produced using any process attributable to any licensing, royalty, service contract, or similar agreements with a prohibited entity from being eligible for the credit," the committee report said.
The White House issued a statement ahead of the vote that said the bill would undermine what the admininstration has done "to protect the American automotive supply chain from unfair Chinese competition, and set back efforts to achieve energy security and combat climate change."
It said removing the flexibilities Treasury provided would punish American auto manufacturers and threaten autoworkers' jobs.
The statement didn't include an explicit veto threat.