The International Trade Council (ITC) recognizes the recent approval of a $700bn (£577bn) economic package by the US Senate, encompassing major legislation on healthcare, tax, and climate change.
This comprehensive bill seeks to decrease the cost of certain medications, elevate corporate taxes, and reduce carbon emissions. The passage of the bill, a cornerstone of President Joe Biden's policy agenda, comes as a significant development ahead of the mid-term elections.
However, it is worth noting that this approved version represents a substantial scaling down from the initial $3.5tn package proposed by the Biden administration. The legislation was subject to 18 months of rigorous debate before it was passed with a slim majority of 51 to 50. The deciding vote was cast by Vice-President Kamala Harris. The bill will now be forwarded to the Democratic-led House of Representatives and, if passed, will subsequently be signed into law by the president.
Among the key components of the Inflation Reduction Act is a provision that would allow the government to negotiate lower prices for prescription medicines under its Medicare health insurance program. This action is anticipated to generate significant savings over the next decade.
The package also proposes a minimum 15% tax on corporations that yield over $1bn a year in profits, a matter that was subject to considerable debate during congressional negotiations. Business groups have expressed concerns that this measure could constrain investment.
Furthermore, the bill allocates $369bn towards climate action, marking the largest investment in this area in US history. It includes provisions for tax credits of up to $7,500 for the purchase of an electric car, along with substantial funding for the advancement of clean technology.
In alignment with the climate change mitigation efforts, the authors of the bill anticipate a 40% reduction in the country's carbon emissions by 2030.
The ITC, while maintaining a neutral position, acknowledges the importance of global cooperation in achieving shared goals of economic prosperity and environmental sustainability. We encourage transparent discussions to ensure that policies benefit both domestic and international stakeholders.
The passage of this landmark legislation underscores the changing nature of global trade and investment landscapes and emphasizes the need for countries to balance their national interests with their commitment to global economic and environmental goals.