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| An Sung-il, right, head of the Ministry of Trade, Industry and Energy's Office of International Trade and Legal Affairs, arrives at the departures section of Incheon International Airport, Monday as he heads to Washington D.C. to deliver the concerns of Korean businesses. |
Industry minister Lee says IRA may violate KORUS FTA, WTO rules
By Baek Byung-yeul
The government dispatched to Washington D.C., Monday, a delegation comprised of officials from the industry, finance and foreign affairs ministries to convey the concerns of Korean businesses regarding the U.S. Inflation Reduction Act (IRA), which could have a severe and negative impact on certain local industries.
"The government delegation will visit Washington D.C. to meet with officials from the U.S. administration and Congress to discuss the IRA, signed by President Joe Biden on Aug. 16," the industry ministry said.
Among Korean business leaders, there are concerns over the IRA, as the U.S. denies tax credits to buyers of electric vehicles (EVs) manufactured outside of North America.
Due to the law, Hyundai Motor Group's EVs, such as the Ioniq 5 and the EV6, were excluded from tax credits since they are produced in Korea. If there is no progress in talks between the two countries over the issue, the Korean automobile industry will be severely hit in the U.S. market, which is the world's second largest for vehicles.
An industry official said he expects that the government's efforts to deliver the concerns of domestic industries will lead to favorable decisions for Korean businesses.
"We understand that the government is working on conveying the concerns of domestic industries over the IRA issue. We hope that our voices might be conveyed to the U.S. when the officials meet their U.S. counterparts," the official said, asking for anonymity.
The delegation's visit can also be interpreted as a prerequisite for meetings between high-ranking officials of the two countries.
The industry ministry said Trade Minister Ahn Duk-geun will visit the U.S. next week as he is scheduled to participate in a ministerial meeting of the Indo-Pacific Economic Framework.
"In the wake of the trade minister's visit to the U.S., the government plans to upgrade talks between the two countries to a higher level," the trade ministry said.
Industry Minister Lee Chang-yang is also expected to meet with U.S. Ambassador to Korea Phillip Goldberg on Wednesday to discuss the IRA.
The minister believes that the IRA is likely to violate the Free Trade Agreement between the U.S. and Korea and the regulations of the World Trade Organization.
"The government cannot officially say it is a violation, but it will proceed with the WTO filing process if necessary," the minister told lawmakers at the National Assembly, Monday. "The Korea-U.S. FTA regulations require us to choose between the Korea-U.S. FTA or WTO procedures. We have to compare the two, but if we choose to go through the WTO procedures, we may cooperate with Japan and EU countries."
Foreign Minister Park Jin also met with Daniel Kritenbrink, the assistant U.S. secretary of state for East Asian and Pacific affairs, at the U.S. Department of State on Aug. 26 and delivered the country's concerns about the IRA.
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