Thursday, March 28

US, South Korea working to rectify problems on EV subsidies: Korea minister


South Korean and US officials are working toward a “concrete proposal” to resolve their differences over electric vehicle subsidies, South Korea’s trade minister told CNBC.

“We’ve established a specific dialogue channel to address this particular issue, and we are glad that the US government wholeheartedly engaged with us to rectify the problems,” Ahn Duk-geun told CNBC’s Chery Kang on Wednesday.

He was referring to concerns about EV subsidies that would put South Korean automakers at a disadvantage, with some South Korean officials calling the move a “betrayal” of the bilateral trust between the two countries.

The $430 billion climate and energy bill, or the Inflation Reduction Act (IRA)was signed into law by President Joe Biden in mid-August.

It includes federal tax credits offering consumers up to $7,500 in credit for those purchasing new electric vehicles assembled in the US – and those purchasing cars made by foreign carmakers like Kia and Hyundai will not be eligible.

Hyundai is the second-biggest EV seller in the US after Tesla.

US Vice President Kamala Harris and South Korean President Yoon Suk Yeol met in Seoul to discuss bilateral relations after officials from two countries engaged in talks regarding the Inflation Reduction Act, which includes a provision that Seoul claims could hurt South Korea’s automakers.

Seong Joon Cho | Bloomberg | Getty Images

Kamala Harris in Seoul

US Vice President Kamala Harris was in Seoul on Thursday where she met South Korea’s President Yoon Seok-yeol, to discuss the concerns faced by South Korean automakers.

A White House readout following the two leaders’ meeting said the US vice president understood the raised concerns and that both pledged to “continue to consult” on the matter.

Yoon’s office cited Harris as saying she would “look into ways to relieve South Korea’s concerns in the process of enforcing the law,” according to a statement on the same meeting.

Breach of WTO rules?

South Korean and European officials have said the tax credit provisions in the IRA are a breach of rules under the World Trade Organization, Reuters reported.

We are disappointed to see in particular this provision [was] included in the IRA without much prior consultations.

Ahn Duk-geun

trade minister, South Korea

China is ‘important trading partner’

Ahn noted that South Korea’s export-reliant economy is indeed “experiencing the decoupling phenomenon” as a result of heightened US-China trade tensions. I did not elaborate further.

South Korea is facing a continued trade deficit problem due to a rise in energy prices, and that Beijing holds a strategically significant role for the country, he added.

“China is still [a] very important trading partner of Korea,” Ahn said.

“I think the stabilization of this trade relationship will play a very important role to secure the global supply in these turbulent and uncertain economic circumstances.”


www.cnbc.com

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