Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Korean businesses up in arms against US Inflation Reduction Act
Hyundai Motor Group Executive Chair Chung Euisun, left, listens to U.S. President Joe Biden's speech at Grand Hyatt Seoul in this May 22 file photo. Yonhap
By Park Jae-hyuk
Hyundai Motor chief Chung visits US to lobby lawmakers, officials
By Park Jae-hyuk
Korean businesses have begun taking countermeasures against the Inflation Reduction Act (IRA), instead of waiting for a diplomatic settlement over a conflict triggered by the new U.S. law that denies tax credits to buyers of electric vehicles (EVs) manufactured outside of North America, according to industry officials, Wednesday.
Hyundai Motor Group Executive Chair Chung Euisun departed for the U.S. on Tuesday, along with Hyundai Motor President Kong Young-woon, who is in charge of government relations. Although the automotive group declined to confirm details about the executives' itineraries, Chung reportedly told a local newspaper reporter at Gimpo International Airport that he will take care of overall affairs, including matters related to the IRA.
Chung is expected to visit Washington, D.C. and New York to lobby U.S. lawmakers and government officials to modify the law. He is also likely to try to reassure investors, considering Hyundai Motor's plan to host a J.P. Morgan-sponsored non-deal roadshow in North America from Aug. 29 to 31.
Korea Enterprises Federation Chairman Sohn Kyung-shik also said at the Korea News Editors Association's forum on Tuesday that businesspeople have continuously made efforts to convince the U.S. government and the Congress.
“When I met with the Hyundai Motor Group executive chair yesterday, I expressed concern about Korea's automotive industry,” Sohn said. “Both the government and the private sector have complained that the IRA is a violation of the Korea-U.S. free trade agreement (KORUS FTA).”
Earlier this month, the Korea Automobile Manufacturers Association (KAMA), comprised of Hyundai Motor, Kia, GM Korea, Renault Korea Motors and SsangYong Motor, sent a letter to the U.S. House of Representatives to demand a revision of the IRA.
“KAMA respectfully requests to include imports of electric vehicles using batteries and battery components manufactured or assembled in Korea in the scope of EVs eligible for the U.S. tax credits under the bill,” the association said in the letter.
It emphasized the fact that Korea has subsidized EVs imported from the U.S. in accordance with the KORUS FTA and that Korean carmakers have hired over 100,000 U.S. nationals through more than $13 billion in investments there over the past three decades.
Korea Enterprises Federation (KEF) Chairman Sohn Kyung-shik, right, talks with Philip Goldberg, U.S. ambassador to South Korea, at CJ's headquarters in Seoul, Aug. 17. Courtesy of KEF
The Korean businesspeople, however, appear to have remained cautious about the possibility of their actions being considered offensive to the U.S.
“It is difficult for Korea to join hands with Japan and European nations to protest the IRA, because this can displease the U.S.,” Sohn said. “Even if the countries raise their voices separately against the U.S., they will focus on the same issue.”
Hyundai Motor Group is considering speeding up the groundbreaking of its EV plant in Georgia to October this year from the first half of 2023, in an apparent attempt to keep pace with the U.S. law. Georgia Department of Economic Development Commissioner Pat Wilson also met with the Hyundai Motor Group executive chair at the conglomerate's headquarters in Seoul last week. They are said to have discussed the new factory's construction.
Amid growing concerns about Korean automakers, Minister of Trade, Industry and Energy Lee Chang-yang said Monday that the government would consider filing a complaint with the World Trade Organization (WTO) against the U.S. law.
Legal experts, however, claimed that a WTO complaint is not the right answer.
“Filing a complaint with the WTO means that Korea will tolerate the obvious violation of the KORUS FTA,” lawyer Song Ki-ho said. “The U.S. has paralyzed the WTO, disturbing the formation of its Appellate Body.”
He urged the Korean government to seek dispute settlement in accordance with the KORUS FTA, given that the agreement stipulates that a dispute settlement panel should consist of a Korean national, a U.S. national and a citizen of a third country.