Lee Chang-yang "Formation of Public-Private Joint Response Team for US Inflation Reduction Act... Minimizing Damage to Domestic Companies"

Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy is delivering opening remarks at the 1st Emergency Economic Ministers' Meeting held at the Government Seoul Office in Jongno-gu, Seoul, on the afternoon of the 19th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Sejong=Reporter Dongwoo Lee] The government announced that it will conduct bilateral negotiations with the United States regarding the U.S. 'Inflation Reduction Act' (IRA), which discriminates against subsidies for Korean electric vehicles, while also considering filing a dispute procedure with the World Trade Organization (WTO). Additionally, it stated that a public-private joint response team will be formed to prevent any damage to domestic companies.

On the 25th, Minister of Trade, Industry and Energy Lee Chang-yang held a meeting with the semiconductor and battery industries at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, saying, "Recently, the U.S. appears to be pursuing the development of advanced industries and protection of its domestic industries through the Semiconductor Support Act and the Inflation Reduction Act. We expect there will be impacts mainly on Korean electric vehicles exported to the U.S., and we will form a public-private joint response team to actively respond."

Earlier, U.S. President Joe Biden signed the Semiconductor Support Act and the Inflation Reduction Act. The Inflation Reduction Act excludes electric vehicles equipped with Chinese batteries and critical minerals from U.S. tax credits and provides support only for electric vehicles produced and assembled domestically. The Semiconductor Support Act strengthens the semiconductor supply chain within the U.S., providing a total of $52 billion in support for building semiconductor manufacturing plants and R&D centers domestically, along with a 25% tax credit for the companies involved.

Minister Lee said, "While our companies may receive support under the Semiconductor Support Act and the Inflation Reduction Act, there are also provisions that impose burdens on our companies, such as guardrail clauses and electric vehicle subsidy requirements. Especially since concerns are high among Korea, Germany, and Japan, which export electric vehicles to the U.S., it is necessary for the public and private sectors to communicate regularly, gather opinions, and prepare response measures."

First, the government plans to review the possibility of violations of trade norms such as the WTO agreements and the Korea-U.S. Free Trade Agreement (FTA), and then convey Korea’s concerns to the U.S. side. Also, since the U.S. Treasury Secretary is scheduled to announce detailed guidelines on battery mineral and component requirements within this year, efforts will be made to reflect the demands of Korean companies as much as possible through consultations with the U.S.

The automotive industry is reviewing various options such as adjusting production plans through early commencement of local factory construction in the U.S., and the battery industry plans to promote diversification of critical minerals by expanding mining investments in FTA partner countries such as Australia and Chile.

The Ministry of Trade, Industry and Energy will form a joint response team led by the Director-General of Trade Policy Bureau as the task force (TF) leader, facilitating frequent communication between the public and private sectors, and will conduct monitoring by industry, trade norms, U.S. outreach, and major country trends.

Meanwhile, the meeting was attended by representatives from the semiconductor, electric vehicle, and battery industries including Samsung Electronics, SK Hynix, Hyundai Motor Company, LG Energy Solution, Samsung SDI, SK On, Korea Semiconductor Industry Association, Korea Automobile Manufacturers Association, and Korea Battery Industry Association.

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