Government Holds Emergency Trade Promotion Committee Meeting... Discusses Response to US Inflation Reduction Act

Ministry of Industry Holds Emergency Trade Promotion Committee Meeting
Establishes Bilateral Consultative Body with the US on 'Electric Vehicle Subsidies'
Strengthens International Cooperation with Germany, Japan, and Others
Also Reviews Dispute Resolution Procedures Including WTO Complaints

Head of Department Ahn Deok-geun greeting upon entering the conference room
(Seoul=Yonhap News) Reporter Seo Daeyeon = Ahn Deok-geun, Head of Trade Negotiations at the Ministry of Trade, Industry and Energy, is greeting as he enters the export status inspection meeting room at the Korea Trade Insurance Corporation in Jongno-gu, Seoul on the 24th. 2022.8.24
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[Asia Economy Sejong=Reporter Lee Jun-hyung] The government held an emergency trade promotion committee meeting to respond to the U.S. Inflation Reduction Act (IRA).

On the 30th, the Ministry of Trade, Industry and Energy announced that it held an emergency trade promotion committee meeting chaired by Ahn Deok-geun, Director-General for Trade Negotiations, at the Korea Chamber of Commerce and Industry in Seoul to discuss countermeasures against the Inflation Reduction Act. Representatives from related ministries, including the Ministry of Foreign Affairs and the Ministry of Economy and Finance, also attended the meeting. Director-General Ahn stated, "The tax benefit provisions of the Inflation Reduction Act discriminate between U.S. and foreign companies," adding, "The government of the Republic of Korea and related industries cannot help but express their concerns."

The Inflation Reduction Act is a law that excludes Korean-made electric vehicles from subsidy eligibility. It was signed into law by U.S. President Joe Biden on the 16th and has since been implemented. The Korea Automobile Manufacturers Association (KAMA) estimates that the Inflation Reduction Act will disrupt exports of approximately 100,000 Korean-made electric vehicles annually.

In response, the government decided to establish a bilateral consultative body with the U.S. This consultative body will strategically discuss only the electric vehicle subsidy system under the Inflation Reduction Act with the U.S. Director-General Ahn explained, "We can utilize existing channels such as the Supply Chain and Industrial Dialogue (SSCD) between the Ministry of Trade, Industry and Energy and the U.S. Department of Commerce, or establish a separate channel."

The government is also considering dispute resolution procedures such as filing a complaint with the World Trade Organization (WTO). Director-General Ahn said, "We will concurrently review dispute resolution procedures under trade norms," adding, "Since mutual investments are increasing in advanced technology and supply chain sectors and there are many areas for future cooperation, we will separately develop the economic and trade cooperation relationship."

International cooperation to respond to the Inflation Reduction Act will also be strengthened. This is because the Inflation Reduction Act applies equally not only to Korea but also to German and Japanese automobile companies. The Ministry of Trade, Industry and Energy plans to seek solutions through multilateral cooperation with countries in similar situations to Korea.

Director-General Ahn also emphasized the necessity of an inter-ministerial cooperation system. He said, "Given the seriousness of the situation, it is necessary to strengthen the inter-ministerial cooperation system," adding, "We will activate a 'Government Joint Countermeasure Team' involving related ministries based on the emergency trade promotion committee and hold consultations as needed."

Additionally, Director-General Ahn plans to visit the U.S. next week to meet with senior officials, including Katherine Tai, U.S. Trade Representative (USTR). He stated, "We will share information such as the results of the meetings through the Government Joint Countermeasure Team and deliberate on countermeasures." He also added, "While there are concerns about the discriminatory electric vehicle subsidy system in the Inflation Reduction Act, there are also opportunities. If battery requirements are met, domestic battery companies are expected to expand their entry into the U.S. market more actively."

Meanwhile, the government maintains that it has responded to the Inflation Reduction Act from multiple angles. In fact, the Ministry of Trade, Industry and Energy recently held meetings with senior and working-level officials from the USTR and the U.S. State Department, which are related ministries for the Inflation Reduction Act. Immediately after the implementation of the Inflation Reduction Act, the government also sent letters expressing concerns about the Act to the U.S. Congress and administration.

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