Korean delegation travels to Washington to negotiate US IRA

The South Korean government is sending a delegation of negotiators to Washington to discuss the US Inflation Reduction Act, which excludes electric vehicles built outside of North America from tax benefits, Seoul’s Foreign Ministry said Monday.

The move comes as the US inflation law signed last week sparked concerns among EV makers, as it would get rid of tax subsidies given to EVs assembled in Korea. The act, signed into law by US President Joe Biden last week, also requires the batteries and battery materials used in the EVs to be made in the US.

The delegation includes senior officials Deputy Minister for International Trade and Legal Affairs of the Industry Ministry An Sung-il and Director-General for Bilateral Economic Affairs of the Foreign Ministry Lee Mi-yon. They will travel to Washington from Monday to Wednesday to meet with officials of the US administration and Congress, according to the Foreign Ministry.

The delegation will visit the United States Trade Representative, Department of the Treasury and Department of Commerce among others to relay concerns of Seoul and Korean companies and demand for flexible implementation of the law, the ministry added.

The senior officials will also hold a conference with Korean automobile and battery companies that operate in the US to assess the status quo, and discuss possible plans for government support.

South Korean carmakers, including Hyundai Motor and Kia, fear losing ground in the US market due to the law. The leading automakers build their flagship models in Korea and export them overseas.

The government is sending the delegation ahead of Trade Minister Ahn Duk-keun’s Washington trip for a meeting of the Indo-Pacific Economic Framework next week. Ahn has requested the US government to ease the requirements of the IRA.

While it would be a “last resort,” Industry Minister Lee Chang-yang also said the government will consider bringing the case to the World Trade Organization for its possible violation of the most-favored-nation treatment principle.

South Korean Foreign Minister Park Jin also delivered the country’s concerns in his meeting with Daniel Kritenbrink, the assistant secretary of state for East Asian and Pacific affairs at the US Department of State on Friday.

Park highlighted South Korean companies’ promises of massive investment in the US, Seoul’s joining of the US-led Indo-Pacific Economic Framework and other regional discussions for resilient supply chains at the meeting.

Park urged the US government to address Korea’s concerns on the act’s impact to Korean industries, and come up with possible solutions such as exemptions or delaying the implementation of the law.

By Jo He-rim (herim@heraldcorp.com)