Minister of Industry Raises Concerns to the US over 'Inflation Reduction Act'... "Potential Violation of the Korea-US FTA"

Minister of Industry Meets with 9 Visiting US House Representatives
"Inflation Reduction Act Negatively Impacts Korea-US Economic Cooperation"

Minister Lee Chang-yang Responding
(Seoul=Yonhap News) Photo by Baek Seung-ryeol = Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy is answering questions from lawmakers at the plenary session of the Industry, Trade, Industry, and Small and Medium Venture Business Committee held at the National Assembly in Yeouido, Seoul on September 1, 2022. [National Assembly Photojournalists Group]
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[Asia Economy Sejong=Reporter Lee Jun-hyung] Lee Chang-yang, Minister of Trade, Industry and Energy, raised concerns about the Inflation Reduction Act (IRA) to a delegation of U.S. House Representatives visiting Korea.

The Ministry of Trade, Industry and Energy announced that Minister Lee met with nine U.S. House members who visited Korea on the 5th and expressed concerns regarding the Inflation Reduction Act. The IRA, which came into effect last month, includes a provision that subsidies are only given to electric vehicles finally assembled in North America, including the U.S. This means that Korean electric vehicles, such as those from Hyundai Motor Company, are excluded from subsidy eligibility.

In response, Minister Lee pointed out that the IRA may violate international trade norms. He stated, "(The Inflation Reduction Act) has the potential to violate international trade norms such as those of the World Trade Organization (WTO) and the Korea-U.S. Free Trade Agreement (FTA)," adding, "The introduction of discriminatory measures against Korean electric vehicles raises concerns about negative impacts on future Korea-U.S. economic cooperation."

Minister Lee also conveyed the concerns of the domestic automotive industry. In fact, the Korea Automobile Manufacturers Association (KAMA) expects that the IRA will disrupt exports of about 100,000 Korean electric vehicles annually. Minister Lee said, "The tax benefits for electric vehicles discriminate between U.S.-made and imported electric vehicles, causing significant concern for the Korean government and industry," and emphasized, "A prompt solution must be found through bilateral consultations." He added, "Recently, Korean companies have been actively investing in the U.S.," and stated, "To strengthen mutual investment cooperation, uncertainties like those caused by the Inflation Reduction Act must be eliminated and predictability increased."

Minister Lee also requested the attention and efforts of the U.S. Congress. He said, "It is necessary to establish a bilateral consultation channel between Korea and the U.S. to continue discussions," and expressed hope that "in-depth discussions with the U.S. government and Congress regarding the resolution of the Inflation Reduction Act will proceed."

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