U.S. President Joe Biden guides Hyundai Motor Group Chairman Euisun Chung to the podium for the announcement of an additional investment in the U.S. at the Grand Hyatt Hotel in central Seoul on May 22, 2022. (Yonhap)
SEOUL, Aug. 25 (Korea Bizwire) — South Korea will seek a joint response with the European Union over the U.S. Inflation Reduction Act that excludes electric vehicles assembled outside of North America from tax incentives, the industry ministry said Thursday.
The law, signed by U.S. President Joe Biden last week, calls for the expansion of tax subsidies for EV purchases, but only for those assembled in North America. It also requires U.S.-made batteries and battery materials in EVs.
South Korean carmakers, including Hyundai Motor Co. and Kia Corp., are feared to lose ground in the world’s most important auto market due to the law, as they make their flagship models at domestic plants and ship them overseas.
Battery makers here are also heavily dependent on China for their supplies of key minerals for manufacturing.
“Concerns have been shared by some European exporters, including Germany and Sweden. Starting next month, we will have active consultations with the EU and other nations in the same position to explore joint responses,” Deputy Trade Minister Jeong Dae-jin told reporters.
The Korea Automobile Manufacturers Association also plans to issue a joint statement over the matter with its European counterpart around next month, according to industry sources.
During a parliamentary session Tuesday, Industry Minister Lee Chang-yang said that the government will actively review whether to bring the case to the World Trade Organization (WTO) for its possible violation of the most-favored-nation treatment principle.
But Jeong made it clear that filing a complaint with the WTO will be “a last resort,” vowing to thoroughly have one-on-one talks with Washington first for the flexible implementation of the law.
Senior Seoul officials were to fly to the U.S. next week, and Trade Minister Ahn Duk-geun plans to meet with U.S. officials for talks on the act during his scheduled trip to Washington next month, according to the ministry.
“We will do everything to reflect our companies’ demand to subordinate regulations of the act that the U.S. government is expected to announce within this year,” a ministry official said.
Industry Minister Lee Chang-yang (2nd from L) speaks during a meeting with corporate officials at the Korea Chamber of Commerce and Industry in Seoul on Aug. 25, 2022, to discuss measures to cope with the U.S. government’s subsidies for its semiconductor and electric car industries. (Yonhap)
The Seoul government has also been actively pushing for discussions with Washington over its new chips bill, dubbed the Chips and Science Act.
It calls for tax credits for corporate investment in semiconductor manufacturing in the U.S., but the “guardrails” in the legislation ban recipients of tax credits and other benefits from making a fresh investment regarding chips in China for 10 years.
As a response, the industry ministry set up a joint response team with private firms to review related trade regulations, boost communications with the U.S. side and enhance monitoring of major nations’ moves regarding the law.
On Thursday, Industry Minister Lee Chang-yang met with related firms in the semiconductor, car and battery sectors, including Samsung Electronics Co., SK hynix Inc., LG Energy Solution Ltd., Hyundai Motor Co., and Kia Corp., and discussed ways of cooperation, his office said.
(Yonhap)
