Korean Electric Vehicle Industry "French Version of IRA May Violate Korea-EU FTA"

"Farther from Europe, Disadvantageous When Receiving Subsidies"

South Korean companies have expressed concerns to the French government that the 'French version of the Inflation Reduction Act (IRA),' which determines electric vehicle (EV) subsidy eligibility based on carbon emissions, may violate the Korea-European Union (EU) Free Trade Agreement (FTA).

According to industry sources on the 29th, the Korea International Trade Association and the European Korean Business Association submitted a statement to the French government on the 25th regarding the draft enforcement regulations of the 'Green Industry Act,' which includes the EV subsidy reform. The statement noted that the draft "potentially violates the Korea-EU FTA, which prohibits discriminatory treatment."

According to the draft enforcement regulations of France's Green Industry Act, an 'environmental score' is calculated by summing carbon emissions generated throughout all processes from production to transportation to determine EV subsidy eligibility. Vehicles scoring below a certain threshold will be excluded from receiving subsidies. The regulation is scheduled to be implemented after a six-month grace period starting in January next year.

If implemented as drafted, Korean EVs exported to the EU are likely to be excluded from subsidy eligibility. The industry views the system as being designed to significantly disadvantage countries farther from Europe, including South Korea, when determining subsidy eligibility. There is also concern that France's measures could be expanded to other countries within Europe.

The Korea International Trade Association argued in its statement that "the carbon emission factor for maritime transport is set more than ten times higher compared to globally recognized data," adding, "This unfairly disadvantages EVs imported from countries far from France, such as Korea, undermining their eligibility for EV subsidies." They further emphasized the request to delete the discriminatory maritime transport carbon emission factor clause targeting long-distance production companies.

Additionally, they requested a detailed explanation of the specific evaluation methods related to the use of recycled and bio-sourced materials, which account for about 30% of the environmental score calculation.

An automotive industry official said, "Although France itself is a significant market within Europe, it is also one of the major EU countries," adding, "Ultimately, the greatest concern is the possibility that other countries will follow suit."

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