KAMA Requests US House to Reconsider Legislation on Discriminatory Electric Vehicle Subsidies

US Democratic Party Pushes for EV Tax Benefits Favoring Domestic Automakers Owned by Labor Unions

[Asia Economy Reporter Yoo Je-hoon] As the U.S. Democratic Party is pushing for electric vehicle (EV) tax incentives favoring domestic automakers with labor unions, the Korean automotive industry has submitted a letter to the U.S. House of Representatives requesting reconsideration.

The Korea Automobile Manufacturers Association (KAMA) announced on the 7th that it delivered a letter requesting reconsideration of the tax reform bill introduced last month by U.S. Congressman Dan Kildee (Democratic Party) to the U.S. House of Representatives on the 1st.

The contentious part of the tax reform bill that concerns the Korean automotive industry is the provision of additional tax credits on top of the existing $7,500 tax credit per electric vehicle (BEV, PHEV). Specifically, an additional $4,500 tax credit is offered for EVs produced in U.S. factories with labor unions, and an additional $500 tax credit is provided if the vehicle is equipped with U.S.-made batteries.

KAMA explained that if this bill is enacted, unlike the U.S. Big Three automakers?General Motors (GM), Ford, and Stellantis?which have labor unions in their U.S. plants, foreign manufacturers and importers without unions in their U.S. factories would not receive the additional tax benefits, potentially weakening their price competitiveness. In fact, 12 foreign automakers, including Hyundai Motor Company, have sent letters requesting reconsideration of the bill to U.S. House Speaker Nancy Pelosi (Democratic Party) and others.

In the letter, KAMA Chairman Chung Man-ki pointed out, "This bill could lead to a reduction in the number of EV models available in the U.S. market, limiting consumer choice and shrinking the EV market. Although union formation is a private and voluntary matter, discriminating against companies solely because they lack unions could also result in discrimination against workers and their families at non-union plants."

Chairman Chung further stated, "Under the Korea-U.S. Free Trade Agreement (FTA), both countries are required to provide national treatment to each other's products, meaning imported goods should not be treated less favorably than domestic products. However, this amendment conflicts with that provision. Additionally, the WTO agreement prohibits 'import substitution subsidies' that are contingent on the use of domestic products, and if such subsidies exclude or hinder imports of like products from other member countries, they are considered 'actionable subsidies.' Therefore, this House amendment may violate the WTO Subsidies Agreement."

Chairman Chung also requested, "Please remove the discriminatory tax support provisions between imported and U.S.-made EVs, as well as between EVs produced in unionized and non-unionized factories."

This content was produced with the assistance of AI translation services.