Korea-US-Europe-Japan Auto Associations Request "Easing of IRA Requirements and Recognition of Domestic Products"

KAMA, Major Countries' Automobile Associations Compare 'IRA Opinions'
"Common Requests for Requirement Relaxation and Domestic Product Recognition"

[Asia Economy Reporter Kiho Sung] Four automobile associations from Korea, the United States, Europe, and Japan have confirmed that they have requested the expansion of the final assembly requirement related to the Inflation Reduction Act (IRA) to regions outside North America or recognition of domestic products.

On the 24th, the Korea Automobile Manufacturers Association (KAMA) announced that it had reviewed the opinions submitted by major automobile associations worldwide during the public consultation held by the U.S. Department of the Treasury until the 4th (local time) to prepare detailed guidelines for the Inflation Reduction Act.

Comparing the submitted materials, it was found that all four automobile associations ? including KAMA, the U.S. (AAI), Europe (ACEA), and Japan (JAMA) ? commonly requested either the expansion (relaxation) of the final assembly requirement beyond North America or recognition of domestic products.

In particular, AAI proposed that zero-emission vehicles produced in the U.S. and countries with which it has free trade agreements (FTAs) should be treated equally to North American products. ACEA argued that the limited tax incentives for zero-emission vehicles could actually delay the spread of such vehicles within the U.S., so the scope of production requirements should be expanded to regions outside North America.

Additionally, JAMA conveyed the opinion that providing broader and more flexible incentives to offer consumers more choices promotes the transition to zero-emission vehicles and helps achieve the ultimate goal of carbon reduction.

Regarding battery mineral and component procurement requirements, AAI stated that only North American battery components should be recognized, while ACEA pointed out that subsidies conditioned on the use of domestic products violate World Trade Organization (WTO) rules. KAMA and JAMA emphasized that domestic battery minerals and components should be treated equally to North American ones.

Furthermore, KAMA highlighted that under the national treatment principle of the Korea-U.S. FTA, Korean products should be treated equally to American products, and that the Korean government provides subsidies equally not only for domestically produced vehicles but also for imported American electric vehicles. Based on this, considering that Korean automobile companies contribute to the U.S. economy and employment through large-scale investments in the U.S., Korean electric vehicles should also enjoy tax benefits equal to those of American vehicles.

KAMA Chairman Namhoon Kang stated, “The U.S. Inflation Reduction Act raises concerns about shrinking domestic electric vehicle production and negative impacts on jobs,” and requested that the Korean National Assembly and government strengthen their existing negotiation efforts externally in the future.

He also emphasized, “To resolve the contraction of the domestic production base caused by the Inflation Reduction Act, a substantial incentive policy for attracting and investing in domestic electric vehicle production facilities is necessary,” and added, “The currently pending ‘Special Act on Promotion and Fostering of Future Vehicle Transition’ should be actively promoted as soon as possible.”

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