Seoul to review possible WTO complaint over U.S. inflation act: industry minister

Diplomacy 17:03 August 22, 2022

SEOUL, Aug. 22 (Yonhap) -- South Korea will review whether to file a complaint with the World Trade Organization (WTO) over a new act in the U.S. that excludes electric vehicles built outside of North America from tax breaks in America, Seoul's industry minister said Monday.

The Inflation Reduction Act, signed by U.S. President Joe Biden last week, calls for expansion of tax subsidies for electric vehicle (EV) buyers, but only for EVs assembled in North America.

Major South Korean automakers, including Hyundai Motor Co. and Kia Corp., have voiced concerns over the act, as they make their flagship EVs, such as the IONIQ 5 and EV6, at domestic plants and ship them overseas.

"We will actively review whether to bring the case to the WTO. We are very much concerned about the act, and we have conveyed our message to the U.S. Trade Representative that the law would violate WTO and bilateral free trade deal rules," Industry Minister Lee Chang-yang told a parliamentary session.

Officials here have said that Washington may have violated the terms of the South Korea-U.S. free trade agreement, and the WTO's most-favored-nation treatment principle, through the enactment of the bill.

According to Lee, Trade Minister Ahn Duk-geun plans to discuss the matter with U.S. officials during his trip to Washington next week.

During his call with U.S. Secretary of State Antony Blinken last Friday, Seoul's Foreign Minister Park Jin voiced concerns over the law and asked for flexible implementation of it, according to diplomatic sources.

Flagship EV models for Hyundai Motor and Kia have been gaining traction in the U.S. market in recent years. The two companies aim to sell 3.23 million EVs, including 840,000 units in the U.S., in 2030 to account for 12 percent of the global EV market.

Following the passage of the law, Hyundai Motor is considering accelerating the construction of its dedicated EV plant in Georgia, industry sources here said.