Canada still has time to act before U.S. vote on disputed EV tax credit - trade min

© Reuters. Canada's International Trade Minister Mary Ng speaks during Question Period in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada November 29, 2021. REUTERS/Blair Gable/Files

By David Ljunggren

OTTAWA (Reuters) - Canada still has some room for maneuver before the U.S. Senate votes on a proposed electric-vehicle tax credit for American manufacturers, a measure Ottawa opposes, Trade Minister Mary Ng said on Friday.

Ng, speaking by phone from Washington after three days of lobbying against the measures, reiterated that Canada would "respond accordingly" if the credit were implemented.

Canada fears the credit will undermine its own efforts to produce electric vehicles in Ontario - the country's industrial heartland - and also undermine the integrated North American auto industry.

"What I learned is that we do have some runway," said Ng, who met several senators and union representatives.

"Senators said to me 'Let me look into this a little further, let me do a little bit more research,'" she said. "This, of course, is not going to be solved overnight. There is a lot of work to do."

Some senators did not appear to know that the proposed credit violates the United States-Mexico-Canada continental trade pact, Ng said. The White House says this is not so.

Legislators are considering a new $12,500 tax credit that would include $4,500 for union-made U.S. electric vehicles.

Ng said she had stressed that the measure was harmful and would affect hundreds of thousands of Canadian jobs. If it is enacted, "we will respond accordingly", she said, but did not give details.

In previous trade disputes between the two close neighbors and trading partners, both sides have slapped sanctions against a wide range of goods.

Earlier this month Prime Minister Justin Trudeau failed to convince U.S. President Joe Biden to scrap the credit, which is also opposed by a range of nations.

Mexico is analyzing a range of legal actions in response that may include tariffs, the economy minister said on Thursday.