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President Yoon Suk-yeol and U.S. President Joe Biden held a Korea-U.S. summit on the 26th (local time) and agreed to engage in consultations and coordination regarding the Inflation Reduction Act (IRA) and the CHIPS Act. The IRA and the CHIPS Act, which had been pointed out as sensitive issues ahead of President Yoon's state visit to the U.S., were expected to see substantial easing through this summit, but instead of having a tense time, the two leaders focused more on strengthening their strategic partnership.

After concluding the summit at the White House in Washington D.C. that afternoon, President Biden pointed to the IRA and the CHIPS Act and stated, "As much as it helps U.S. interests, it also benefits Korean companies." He explained that Korea is the most important partner in the economic sector, another core pillar of the Korea-U.S. alliance alongside the security alliance, and added, "Korean companies understand that the U.S. is trying to minimize any negative impact in any way."

In particular, President Biden expressed confidence in a 'win-win' relationship with Korea. When asked whether the policy to limit semiconductor production expansion in China might harm the ally Korea as well, he replied, "It was not designed to harm China," and said, "(The CHIPS Act) is creating significant economic growth in the U.S. and is not harming anyone." He continued, "It is also creating jobs in Korea. Not only SK but Samsung and other industries are creating jobs," and mentioned, "So I think it is a win-win."

However, the absence of detailed coordination on the IRA and the CHIPS Act, which the domestic industry had been expecting, remains a regrettable point. Regarding the IRA, Korean automobile companies are excluded from the subsidy payment targets finalized by the U.S. government. From Korea's perspective, the key is to buy as much time as possible until dependence on China is reduced, so measures to reduce immediate damage through securing time extensions and flexible application of detailed regulations were necessary.

Regarding semiconductors, the U.S. government is also requiring companies to submit sensitive information such as yield rates (the ratio of acceptable products among produced items). This was another point where clarification from the two leaders was expected. The domestic industry unanimously called it an "excessive clause" and hoped for an agreement to minimize the scope of confidential data submission during this summit.

Political circles responded quickly as well. The opposition parties, including the Democratic Party of Korea, said on the day, "Improvements to the IRA and the CHIPS Act were needed, but there was no specific mention," and criticized, "The joint statement says it is a win-win, but we do not know what is win-win." Another opposition party official pointed out, "Given that the largest-ever delegation of businesspeople accompanied the summit, they must have been very disappointed." From the companies' perspective, since they have no choice but to continue large-scale investments in the future, the fact that the summit ended with cooperation rather than detailed arrangements means that uncertainties have not been eliminated.

As a result, the two leaders included only the content in the joint statement that "the IRA and the CHIPS Act will be closely consulted to create predictable conditions that promote mutually beneficial investments." This means that the two countries will engage in consultations and coordination to expand cooperation in advanced technology sectors, which is linked to managing the global supply chain system, and they intend to approach this primarily as a strengthening of their strategic partnership.

A presidential office official also explained to reporters after the summit that such criticism does not have a significant impact on the domestic industry. First, regarding the IRA, the official argued that since the amount of electric vehicles produced by Korean companies in the U.S. is very small, most of the act does not apply. The official also added that, on the contrary, the IRA tax credit benefits are available to Korean companies' commercial vehicles, which has led to a recent increase in Hyundai Motor's electric vehicle sales in the U.S.

In particular, the battery industry is judged to have opportunities from the IRA. This is because the three domestic battery companies?LG Energy Solution, SK On, and Samsung SDI?have met the IRA's battery mineral and component requirements. The official also elaborated on the CHIPS Act, saying, "We have expressed our intention to exercise flexibility in the detailed requirements for subsidy payments in the direction desired by our companies, and relevant ministries will continue consultations," and added, "Regarding semiconductor equipment export regulations, we have agreed to closely coordinate to ensure there is no disruption in the supply of equipment from our companies."

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