[The Editors' Verdict] Companies Must Be Protected Like Overseas Koreans

The Ministry of Foreign Affairs Must Not Overlook Corporate Interests
No More IRA Victims Amid Fierce Lobbying in Washington

[Asia Economy Reporter Baek Jong-min] "After the United Auto Workers (UAW) union of General Motors (GM) intervened in the U.S. Inflation Reduction Act (IRA), the content changed significantly." A source familiar with the U.S. Congress said this.

I was quite surprised. It is natural for American automakers to lobby for electric vehicle subsidies, but it was unexpected that the union itself directly engaged in lobbying. Based on the source's remarks, it is possible to speculate that the UAW played a role behind the IRA's provision to restrict subsidies only to American-made electric vehicles. This helped me understand why the IRA contains provisions that contradict the Korea-U.S. Free Trade Agreement (FTA).

The electric vehicle subsidies included in the IRA fluctuated back and forth. The initial electric vehicle subsidy proposed under President Joe Biden's "Build Back Better Act (BBA)" was up to $12,500. However, there was a condition: the subsidy applied only to electric vehicles produced in factories with union representation. The electric vehicle subsidy provisions were shaken when Democratic Senator Joe Manchin opposed the BBA. Conditions such as a cumulative sales cap of 200,000 vehicles per automaker, requirements for American-made vehicles, and union involvement were added or removed. Ultimately, the remaining condition was that the electric vehicles and plug-in hybrid vehicles had to be produced in the U.S. The conclusion was a victory for American and Japanese companies. GM, which had already exceeded the subsidy limit, Tesla without a union, and Japanese Toyota, which manufactures hybrid vehicles in Manchin's district, were able to add subsidies and sell cars at lower prices. Hyundai and Kia, which have rapidly emerged as strong players in the U.S. electric vehicle market, ended up caught in a crossfire.

In the U.S., lobbying is directed more toward Congress than the executive branch. Unlike Korea, where the executive branch is strong, the U.S. Congress holds significant power. The government makes policies, and Congress makes laws. Which is harder to change, policies or laws? Obviously, laws. Even if the Korean government's IRA response delegation visits the U.S. belatedly, it is difficult for the American side to offer a sharp solution.

The legislative process in the U.S. Congress is more complex than in any other country. Detailed provisions of U.S. bills often emerge late in the final legislative process. Therefore, more preparation is necessary. Inevitably, the power of lobbyists must also be leveraged. This is why our large corporations are opening offices in Washington one after another.

Over the 30 years since establishing diplomatic relations with China, our economy benefited from China's economic development. During the previous administration, there was even a saying: security with the U.S., economy with China. Now, things have changed. Since the Biden administration, which aims to check China and Russia, the focus of Korea-U.S. relations has shifted from security to the economy. Korean companies such as Samsung, Hyundai, and SK are also opening their investment portfolios to the U.S. one after another.

How did the government prepare for this changed situation? During the previous administration, even as the BBA was being pushed forward, until the last days of the term, efforts were focused on persuading the U.S. political circles for a declaration of the end of the war, mobilizing Korean Americans in the U.S. The result was empty-handed. What about the Yoon Suk-yeol administration? President Yoon had an opportunity to express concerns when he met House Speaker Nancy Pelosi, who visited Korea about a week before the IRA bill's House vote, but it was limited to a phone call.

While the previous government prioritized protecting overseas Koreans, the Yoon administration must protect our companies that are actively operating worldwide. That is the way to safeguard national interests. Post-event, ineffective measures are no longer acceptable.

Baek Jong-min, Opinion Editor

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