France’s plans to tie cash incentives for new electric cars meeting low-carbon standards will not fall foul of WTO rules, a finance ministry source said on Tuesday as Paris seeks to exclude car makers in Asia from benefitting from the subsidies.
President Emmanuel Macron said last week that an existing 5,000-euro (USD 5,504) subsidy available to electric car buyers and financed by French taxpayers should not benefit vehicles made outside Europe.
Presenting a new green industry bill on Tuesday, Finance Minister Bruno Le Maire said that of the 1.2 billion euro (USD 1.65 billion) annual cost of the cash incentive 40% ended up going to car makers in Asia.
He said that the subsidy would therefore be made conditional on meeting low-carbon standards when manufactured, which he said would in effect exclude electric cars not made in Europe.
“This measure is compatible with World Trade Organisation law because it does not create a barrier of entry to imported products. It uses environmental criteria as a condition to state aid,” the finance ministry source said after Le Maire’s remarks.
Le Maire said that the carbon intensity of the production of a vehicle’s steel and battery would be taken into account as well as whether recycled materials were used.
