Seoul accelerates efforts to resolve IRA concerns

The Korea Times

The Korea Times

National

Wed, November 29, 2023 | 23:58

Foreign Affairs

Seoul accelerates efforts to resolve IRA concerns

Posted : 2022-09-13 15:15

Updated : 2022-09-14 13:18

By Kang Seung-woo

The Korean government is poised to step up its efforts to persuade the United States to ease growing concerns over the effects of the new Inflation Reduction Act (IRA), which poses a threat to Korean automakers.

The efforts are being spearheaded by two vice foreign ministers, who plan to meet with senior U.S. officials to discuss the issue. President Yoon Suk-yeol is also anticipated to bring it up during his envisaged meeting with U.S. President Joe Biden in New York, where he will attend the United Nations General Assembly as well.

First Vice Foreign Minister Cho Hyun-dong and Second Vice Foreign Minister Lee Do-hoon / Korea Times file

Last month, Biden signed the IRA, which, as indicated by its name, is aimed at lowering costs for U.S. consumers, investing in domestic clean energy production and supporting affordable healthcare.

The IRA provides a government tax credit of up to $7,500 (10 million won) to each buyer of an electric or fuel cell vehicle assembled in North America. A portion of the tax credit ― $3,750 ― will be made available when EV makers use batteries made of at least 40 percent critical materials extracted or processed from the U.S. or countries that have free trade agreements with the U.S., or are recycled in North America. The percentage will increase in stages to 80 percent by 2027. However, Korea-made electric cars are currently excluded from the tax credit system due to being manufactured outside of the U.S.

First Vice Foreign Minister Cho Hyun-dong is scheduled to travel to the U.S., Wednesday, to discuss the issue of the IRA with U.S. Deputy Secretary of State Wendy Sherman. The vice-ministerial talks come on the sidelines of a meeting of the Extended Deterrence Strategy and Consultation Group (EDSCG), slated for later this week in Washington, D.C. The EDSCG is a high-level consultative mechanism to achieve North Korea's denuclearization through steadfast deterrence, which will be resuming after a near five-year hiatus.

Following Cho's visit, Second Vice Foreign Minister Lee Do-hoon will also fly to the U.S. and sit down with Under Secretary of State Jose Fernandez. Given that both are the respective representatives in the Korea-U.S. Senior Economic Dialogue, there are speculations that they may hold substantive discussions about the IRA.

In addition, Lee plans to hold meetings with key figures of U.S. Congress, during which the vice foreign minister is set to point out that the new U.S. law violates the U.S.-Korea Free Trade Agreement and World Trade Organization regulations, while calling for Congress-level efforts to resolve Korea's grievances regarding the IRA.

Previously, Trade Minister Ahn Duk-geun visited the U.S. earlier this month and met with officials from the White House and the United States Trade Representative and as a result, the two countries agreed to launch a consultation channel to discuss the issue.

While Korea is attempting to address its concerns over the IRA, President Yoon will visit New York for the U.N. General Assembly on Sept. 20, where he will deliver a keynote speech.

On the sidelines of the gathering at the U.N., Yoon is likely to sit down with Biden, according to the presidential office, and he may take up the issue of the IRA.

When National Security Adviser Kim Sung-han met his U.S. counterpart, Jake Sullivan, in Hawaii late last month, he delivered Korean businesses' concerns about the IRA and consequently, Sullivan agreed that the NSC will look into the issue.

"The U.S. side is now closely reviewing how the IRA affects Korea," a senior official of Yoon's office told reporters, Monday.

"It is a really important matter to us, so the issue would be tabled during a Yoon-Biden summit," the official said.

ksw@koreatimes.co.kr