South Korea and the U.S. Agree to Form Separate Consultative Body on 'Electric Vehicle Discrimination'

Andeok Geun, Director-General for Trade Negotiations at the Ministry of Trade, Industry and Energy (left), and Katherine Tai, United States Trade Representative (USTR) [Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Amid criticism that Korean-made electric vehicles were excluded from the subsidy eligibility under the U.S. Inflation Reduction Act (IRA), leading to accusations of being "stabbed in the back," the governments of South Korea and the United States have agreed to establish a separate consultation channel to resolve the discrimination issue.

On the 7th (local time), Ahn Deok-geun, Director-General for Trade Negotiations, and Katherine Tai, U.S. Trade Representative (USTR), met in Washington D.C. and announced this agreement. USTR stated in a press release, "Both sides have agreed to open an 'engagement channel' on this issue." USTR also conveyed that Representative Tai "listened closely" to Korea's concerns regarding the electric vehicle provisions in the Inflation Reduction Act during her meeting with Director-General Ahn.

This consultative body is expected to be separately formed to focus intensively on the electric vehicle issue and will likely be led by the trade representatives of both countries. It is anticipated to be an inter-ministerial consultative body involving other departments related to the electric vehicle issue beyond the trade sector. Both sides reportedly agreed to further discuss the composition of the consultation channel and specific discussion agendas. The start date for the operation of the consultative body has not yet been determined.

The reason the U.S. government is proactively creating a separate consultative body with South Korea is understood to be due to concerns that leaving the heightened domestic atmosphere in Korea?where even the necessity of a World Trade Organization (WTO) complaint is being raised?unaddressed could affect the South Korea-U.S. alliance relationship. Once the South Korea-U.S. electric vehicle consultative body is operational, both sides are expected to thoroughly examine whether there are possible measures at the U.S. government level to mitigate damages.

Brian Deese, Director of the White House National Economic Council (NEC), who met with Director-General Ahn the day before, reportedly said, "I fully understand the seriousness of this issue, which is not limited to Hyundai Motors but relates to the trust in the economic and trade relationship between the two countries." On the same day, John Kirby, Coordinator for Strategic Communications at the White House National Security Council (NSC), stated, "More detailed content can be released in the coming months as domestic rules for implementing the IRA are established."

Meanwhile, USTR said in its press release, "Representative Tai welcomed Korea's close cooperation on the Indo-Pacific Economic Framework (IPEF) with Director-General Ahn and discussed the upcoming IPEF ministerial meeting." It added, "They discussed a wide range of trade issues with the goal of further strengthening partnerships in areas of common interest, challenges related to supply chains, efforts to support environmental protection, and regional and multilateral cooperation including the Asia-Pacific Economic Cooperation (APEC) and the Group of Twenty (G20)."

USTR also stated that both sides emphasized the importance of meaningful actions on clean energy technologies to address supply chain and security vulnerabilities while responding to climate change. Additionally, Representative Tai mentioned during the meeting, "I hope to work closely with Korea to support internationally recognized workers' rights."

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