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Minister holds talks in Washington over IRA and CHIPS Act 2022-09-22

 

Trade, Industry and Energy Minister Lee Chang-yang visited Washington D.C. on September 20-21 and met with U.S. Secretary of Commerce Gina Raimondo and several other U.S. Congress members to raise serious concerns over the recently signed discriminatory electric vehicle (EV) tax cut Act.

In his talks with Secretary Raimondo, Minister Lee focused on EVs and semiconductors, but also mentioned specific implementation measures for bolstering high-tech supply chain partnership between the two countries.

The Minister stated that the Inflation Reduction Act (IRA) could severely undermine the ROK-U.S. cooperation atmosphere due to its discriminatory taxation, and that in view of the urgency in bilateral cooperation on high-tech, supply chain and energy, the situation must be approached in terms of a broader perspective for economic cooperation.

Recent developments have seen a rise in both Korea’s participation in various U.S.-led supply chain consultative bodies (IPEF, MSP) and ROK-U.S. bilateral cooperation for chips, batteries and nuclear energy, all the more with Korea’s new regime stance.

Minister Lee relayed that, as the IRA and its discriminatory measures are likely to impede the currently building momentum of cooperation, both sides will benefit by quickly resolving the matter.

Secretary Raimondo expressed agreement with the concerns raised and stated that the U.S. will remain dedicated in seeking solutions to the issue, and maintained that ROK-U.S. supply chain should be expanded further.

With regard to semiconductors and the CHIPS Act, Minister Lee claimed that the U.S. guardrails provision should neither constrict Korean businesses nor cause confusion across the global chip supply chain, to which the U.S. Department of Commerce stated that it will closely communicate with the Korean government in the process of specifying the provisions.

The Minister also held talks with a number of U.S. Congress members, including Barry Moore, U.S. representative for Alabama's 2nd congressional district. Alabama is one of the regions where Hyundai Motor and Kia are engaging in the automobile market. They discussed possible economic disruptions from the EV tax break, and agreed to work together to seek solutions.

Moreover, Minister Lee also met with U.S. Representative Kathy Castor, Electrification Caucus Co-Chair and Chair of the House Select Committee on Climate Crisis. Representative Castor concurred with Korea’s view that EV tax credits will narrow U.S. consumers’ range of choices while also hampering the movement for climate change response and EV market expansion.

Overall, the talks revealed that the U.S. stance on its IRA resonates with the concerns posed by South Korea. The Korean government will consider all legislative and executive countermeasures in tackling the situation, including close communication with countries in similar positions like EU and Japan.

South Korea and the U.S. will continue on their talks to settle the EV tax cut issue through multiple channels.

On the sidelines of this visit, the Ministry of Trade, Industry and Energy (MOTIE) succeeded in establishing the terms of reference for ROK-U.S. autonomous robotics technology cooperation, specifically between MOTIE and the U.S. Department of Defense (DoD).

The two countries plan to expand the scope of high-tech supply chain collaboration through a regularized cooperation channel in the area of future robot technology.