Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
IRA implementation 'should be discussed' in light of Korean firms' contributions to US economy: Biden
President Yoon Suk-yeol shakes hands with U.S. President Joe Biden during a Korea-U.S. summit held at a hotel in Phnom Penh, Cambodia, Sunday. Yonhap
By Baek Byung-yeul
By Baek Byung-yeul
U.S. President Joe Biden expressed a favorable attitude toward Korea companies, Sunday, at a time when the U.S.' implementation of the Inflation Reduction Act (IRA) is expected to bring a negative impact on Korean carmakers and battery makers. This is considered a step further, following his letter to President Yoon Suk-yeol last month in which he said the two countries should continue consultations on IRA issues.
Yoon and Biden had a summit in Phnom Penh, Cambodia, Sunday evening.
During the meeting, Yoon said, “A consultation channel between Korea and the U.S. to discuss the U.S. Inflation Reduction Act is operating closely. In October, President Biden confirmed the U.S. side's sincere willingness to consult on the IRA in a personal letter.”
In response, Biden told Yoon “Korean companies have contributed greatly to the U.S. economy in areas such as automobiles and electric car batteries. In consideration of these points, measures to implement the IRA should be discussed,” according to the presidential office.
Yoon responded, “As downward pressure on the global economy is increasing due to tightening finances, we expect closer economic cooperation between Korea and the U.S.”
In August, President Biden signed the IRA into law. According to this law, customers who purchase electric vehicles (EVs) assembled or manufactured outside North America are unable to qualify for a tax credit of $7,500.
The law severely affects Hyundai Motor Group's car brands ― Hyundai Motor, Kia and Genesis ― as their EVs are currently manufactured in Korea.
The IRA also requires EVs qualifying for the tax credit from next year to use critical battery materials sourced from the U.S. or countries that have free trade agreement with the U.S., and for the battery components to be manufactured or assembled in North America.
It would be premature to stretch the meaning of Biden's comment, as his response to Yoon did not indicate that he would consider revising the IRA. However, it is meaningful that Biden acknowledged the role of Korean companies in the U.S. economy and promised to take measures during the meeting.
His remarks can be interpreted as more forward-looking than his letter sent to Yoon in October. According to the presidential office, Biden said, “I am aware of President Yoon's concerns about the IRA. We will continue to consult with Korea with an open mind.”