South Korean and U.S. officials are working on a “concrete proposal” to resolve their differences over electric vehicle subsidies, South Korea’s trade minister told CNBC.
“We have established a dedicated dialogue channel to address this particular issue, and we are pleased that the US government has worked wholeheartedly with us to correct the issues.” Ahn Duk Geun Chery Kang told CNBC on Wednesday.
He was referring to concerns that subsidies for electric cars would put South Korean automakers at a disadvantage, a move some South Korean officials called “betrayal” bilateral trust between the two countries.
The $430 billion climate and energy bill, or Inflation Reduction Act (IRA)was signed by President Joe Biden in mid-August.
It includes a federal tax credit that offers a consumer credit of up to $7,500 for those who buy new electric vehicles assembled in the U.S., and those who buy cars from foreign automakers like Kia and Hyundai won’t be eligible.
US Vice President Kamala Harris and South Korean President Yoon Suk-yeol met in Seoul to discuss bilateral relations after officials from the two countries began talks on the Inflation Reduction Act, which includes a provision that Seoul says could harm a South Korean automaker.
Songjun Cho | Bloomberg | Getty Images
“We are disappointed, in particular, with this provision [was] included in the IRA without much prior consultation,” Ahn said, adding that the South Korean government was preparing for “all possibilities,” including proposing legislative amendments to Washington.
His comment was not as strong as the heated rhetoric from Seoul officials in recent weeks.
US Vice President Kamala Harris was in Seoul on Thursday, where she met with South Korean President Yoon Seok-yeol to discuss the challenges facing South Korean automakers.
A White House Reading After the meeting, the two leaders said the US vice president understood the concern and that both promised to “continue consultation” on the matter.
Yoon’s office quoted Harris as saying she was “looking for ways to ease South Korea’s concerns about the implementation of the law,” according to the report. statement at the same meeting.
South Korean and European officials have said the IRA tax credit provisions are a violation of World Trade Organization rules, This is reported by Reuters.
South Korea’s Ministry of Industry confirmed to CNBC that Seoul will consider filing a formal complaint with the WTO over such issues.
Last week, the Korean Confederation of Trade Unions, which represents workers at South Korean domestic companies including Kia and Hyundai, criticizes US actions as “one-sided” and “US-centric” and said they could exacerbate the uncertainty surrounding the current state of the global economy.
Ahn noted that South Korea’s export-dependent economy is indeed “feeling the decoupling phenomenon” as a result of heightened trade tensions between the US and China. He did not specify more details.
South Korea faces a lingering trade deficit due to rising energy prices and that Beijing has a strategically important role for the country, he added.
“China is still [a] is a very important trading partner of Korea,” Ahn said.
“I think stabilizing that trade relationship will play a very important role in securing global supplies in these turbulent and uncertain economic circumstances.”
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