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S. Korean biz lobbies urge U.S. to revise IRA clauses

Economy 12:00 November 17, 2022

SEOUL, Nov. 17 (Yonhap) -- Six major South Korean business lobbies have urged the United States to make changes to the new law on electric vehicles (EVs) in a way that it does not discriminate against Korean automakers and battery producers, the associations said in a joint release Thursday.

They made the repeated call in a joint letter sent to U.S. Congress and heads of the key government agencies, including the Department of the Treasury and the Commerce Department, following last week's U.S. midterm elections.

The Inflation Reduction Act (IRA), signed into law by U.S. President Joe Biden in August, gives up to US$7,500 in tax credits to buyers of EVs assembled only in North America, sparking concerns that Hyundai Motor and Kia Corp. could lose ground in the U.S. market as the two South Korean carmakers assemble EVs at domestic plants for export to the U.S.

The IRA also affects Korean battery makers as it will require EV batteries to be made with a certain portion of minerals mined or processed in the U.S., or countries or regions that have free trade agreements (FTA) with Washington. The required portion of the components will increase over the years.

South Korea, at both the government and business levels, has strongly voiced the need to create exceptions for Korean-made EVs.

In the recent letter, the business lobbies called for the U.S. to apply the same benefits to its allies or give at least a three-year reprieve for affected companies.

"Applying tax credits only to EVs assembled in North America, as well as requiring the use of battery components produced in North America over a certain percentage, is a likely violation of international trade rules and the KORUS FTA, and runs counter to the spirit of bilateral cooperation," the letter read.

The organizations asked to "remove such discriminatory provisions with a view to ensuring the equal eligibility of EV tax credits to EVs and battery components manufactured in allied countries of the U.S."

"Alternatively, the organizations request a grace period of three years before the implementation of EV tax credit rules," it said.

The letter was signed by the Korea Chamber of Commerce and Industry, the Korea International Trade Association, the Federation of Korean Industries, the Korea Enterprises Federation, the Korea Federation of SMEs and the Federation of Middle Market Enterprises of Korea.

S. Korean biz lobbies urge U.S. to revise IRA clauses - 1

elly@yna.co.kr
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