Hong Nam-ki Meets Yellen Directly to Convey "Concerns of Korean Companies on Semiconductor Information Sharing"

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, who is visiting Washington, USA to attend the G20 Finance Ministers and Central Bank Governors Meeting, poses for a commemorative photo on the 14th (local time) at the U.S. Department of the Treasury before a meeting with Janet Yellen, U.S. Secretary of the Treasury. 2021.10.15
[Photo by Yonhap News]

[Washington D.C. (USA) = Asia Economy Reporter Son Sun-hee] On the 14th (local time), Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, met with U.S. Treasury Secretary Janet Yellen to convey the concerns of domestic companies regarding the U.S. government's request for semiconductor companies to provide information. With less than a month remaining until the U.S. side's deadline for data submission (November 8), it is expected that behind-the-scenes dialogue efforts between the two countries will continue.

Hong, who is visiting the U.S. to attend the G20 Finance Ministers and Central Bank Governors Meeting and the International Monetary and Financial Committee (IMFC), moved to the U.S. Treasury Department immediately after the IMFC meeting to meet Secretary Yellen in person and convey these concerns, according to the Ministry of Economy and Finance. The recent U.S. government demand for submission of confidential-level data from semiconductor companies such as Samsung Electronics and SK Hynix has put the industry on high alert. Since this issue is directly related not only to economic matters but also to national security, the government has also stepped up support, but no response from the U.S. side has been reported.

In addition to this, the finance ministers of the two countries discussed G20 issues and bilateral cooperation measures including climate change and pandemic response, digital taxation, global supply chains, and policies toward Iran.

Deputy Prime Minister Hong explained efforts to raise the 2030 greenhouse gas reduction target (NDC) in conjunction with the upcoming announcement of the 'Carbon Neutrality Scenario' at the end of this month and the '26th United Nations Climate Change Conference of the Parties (COP26)' scheduled for next month. Secretary Yellen emphasized the importance of emerging countries' participation in climate change response and requested Korea and the Green Climate Fund (GCF) to take a leading role. They also agreed to actively cooperate in establishing new global health governance to respond to pandemics.

Regarding the introduction of a global digital tax adopted at the G20 Finance Ministers meeting the previous day, both countries reaffirmed their support for it as a meaningful 'international tax reform.' However, they agreed to maintain close communication on remaining issues such as establishing criteria for identifying market jurisdictions for intermediate goods like semiconductors and the scope of the 'safe harbor' that reduces the tax allocation size when sufficient profits are allocated to the market jurisdiction.

Meanwhile, at the earlier IMFC meeting, participants agreed on the 'global economic recovery trend' but assessed that uneven growth among countries continues due to differences in vaccine supply and policy support. They agreed on the need for 'equitable vaccine supply, flexible policy adjustment, and accelerated structural transformation.' Participants also agreed on the preparation of 'medium-term fiscal frameworks' for sustainable finances while considering each country's policy capacity and emphasized the need for appropriate responses if inflation expectations deviate from targets.

Among these discussions, there was also mention of the need to strengthen the IMF's surveillance and capacity development activities. In particular, participants requested the IMF to enhance its surveillance activities such as macro-financial analysis and supported a review of the IMF's official stance on managing sudden capital inflows and outflows.

Deputy Prime Minister Hong stated at the IMFC meeting, "Recent rapid changes in the economic and financial environment and market trends require a paradigm shift in policy responses, and accordingly, there is an increasing demand for policy advice tailored to each country's circumstances," adding, "I expect the IMF's official stance (IV) on capital flow management to consider macroprudential measures in addition to traditional macroeconomic policies to mitigate capital volatility."

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