Automobile Industry Association: "Both Public and Private Sectors Must Act Together to Address the Inflation Reduction Act"

South Korea Emphasizes FTA Partner and Economic Security Ally Status
"Equal Tax Benefits Needed for US-Made Electric Vehicles"
"Subsidy Reform and Temporary Corporate Tax Cuts Also Necessary"

Jung Manki, Chairman of the Korea Automobile Manufacturers Association. / Photo by Dongju Yoon doso7@

[Asia Economy Reporter Kiho Sung] The Korea Automobile Manufacturers Association (KAMA) has called for active joint public-private responses regarding the enactment of the U.S. Inflation Reduction Act (IRA).

In a statement released on the 25th, the association said, "Due to the Inflation Reduction Act, Korean electric vehicles, which hold the second-largest market share in the U.S. electric vehicle market, are unable to receive subsidy benefits, raising concerns about an annual export disruption of approximately 100,000 electric vehicles on a purely arithmetic basis."

It also emphasized, "As a result, not only the finished car industry but also the 13,000 domestic parts suppliers, who are already facing difficulties due to the transition from internal combustion engine vehicles to electric vehicles, could face even greater challenges due to a decrease in domestic production volume."

The association raised four major issues regarding the Inflation Reduction Act: ▲violation of World Trade Organization (WTO) subsidy regulations ▲breach of the national treatment principle under the Korea-U.S. Free Trade Agreement (FTA) ▲contradiction to the vision of the Indo-Pacific Economic Framework (IPEF), which the U.S. is promoting for supply chain cooperation ▲and violation of the spirit of strengthening the Korea-U.S. economic security alliance emphasized during President Biden's visit to Korea this year. It further requested the U.S. Congress and government to provide tax benefits to electric vehicles produced in Korea, an FTA partner and economic security ally, on par with North American electric vehicles.

In particular, Korean automakers have invested over $13 billion in the U.S., creating more than 100,000 jobs. During President Biden's visit to Korea last May, Samsung announced plans to invest $17 billion and Hyundai Motor $10.5 billion in electric vehicle or battery factories, underscoring Korea as a strong economic security ally contributing to the U.S. economy.

Furthermore, the association requested that the Korean National Assembly and government strengthen existing negotiation efforts to amend the U.S. law and enhance outreach activities toward the U.S. Domestically, it called for measures such as improving the electric vehicle subsidy system, providing temporary corporate tax reductions for electric vehicle exporters, and supporting export subsidies for electric vehicles.

Jung Manki, chairman of the association, stated, "The U.S. Inflation Reduction Act could shrink domestic electric vehicle production and negatively impact future vehicle competitiveness and jobs, so active joint public-private responses are urgently needed." He also stressed, "It is necessary to improve the domestic subsidy system, which currently provides about 50% of electric bus subsidies to Chinese products, as well as the zero-emission vehicle supply target system, which has been distorted into a policy promoting electric vehicle imports by focusing solely on achieving electric vehicle supply goals."

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