S. Korean trade minister meets with biz leaders on disadvantageous provisions in new U.S. trade laws
Updated: 2022-08-25
South Korean government officials met with business leaders today to talk about ways to deal with new laws in the U.S. that could put Korean companies at a disadvantage.
Those new laws seek to discourage the purchase of products with materials or components made in China.
Responses could include meeting with U.S. officials directly, changing Korea's production processes and/or sourcing materials from countries other than China.
Shin Ha-young reports.
The Biden administration's Inflation Reduction Act is a concern for South Korea's electric vehicle manufacturers as it only allows tax credits for cars that are assembled in North America.
Then there's the CHIPS and Science Act, which offers semiconductor manufacturers billions of dollars to build new fabrication plants in the U.S. with the condition that they will not make new investments in China.
South Korean companies would get those benefits too, but with strings attached known as "guardrails."
In response, South Korea's Minister of Trade, Industry, and Energy held a meeting with business leaders on Thursday to go over the impacts and to discuss ways to respond such as room for flexibility and possible exemptions.
"We need to prepare shields and spears; shields to deal with the challenges we're now facing under the new laws and sharp spears to take this situation as an opportunity to dominate the market."
In terms of the CHIPS Act, the ministry is planning to express the country's stance through existing channels it has with the U.S. Commerce Department.
Thursday's meeting was joined by officials from major companies including Samsung Electronics, SK hynix, and Hyundai Motor Group, which are expected to suffer under the new laws.
They discussed ways to deal with Inflation Reduction Act, such as by getting automakers to review their production plans and quickly beginning factory construction in the U.S.
For battery makers, it'll be about gradually switching mining investment to other countries like Australia and Chile.
Currently, Korea depends on China for the mining of the raw materials used to make batteries.
Minister Lee Chang-yang added that South Korea's response has been the fastest among other countries that're expected to feel the effects of the new U.S. laws.
"As part of the efforts, a ministry official will visit the U.S. for high-level consultation on the laws with Washington before the end of August, while the Trade Minister is planning to visit in September. Shin Ha-young, Arirang News."
Those new laws seek to discourage the purchase of products with materials or components made in China.
Responses could include meeting with U.S. officials directly, changing Korea's production processes and/or sourcing materials from countries other than China.
Shin Ha-young reports.
The Biden administration's Inflation Reduction Act is a concern for South Korea's electric vehicle manufacturers as it only allows tax credits for cars that are assembled in North America.
Then there's the CHIPS and Science Act, which offers semiconductor manufacturers billions of dollars to build new fabrication plants in the U.S. with the condition that they will not make new investments in China.
South Korean companies would get those benefits too, but with strings attached known as "guardrails."
In response, South Korea's Minister of Trade, Industry, and Energy held a meeting with business leaders on Thursday to go over the impacts and to discuss ways to respond such as room for flexibility and possible exemptions.
"We need to prepare shields and spears; shields to deal with the challenges we're now facing under the new laws and sharp spears to take this situation as an opportunity to dominate the market."
In terms of the CHIPS Act, the ministry is planning to express the country's stance through existing channels it has with the U.S. Commerce Department.
Thursday's meeting was joined by officials from major companies including Samsung Electronics, SK hynix, and Hyundai Motor Group, which are expected to suffer under the new laws.
They discussed ways to deal with Inflation Reduction Act, such as by getting automakers to review their production plans and quickly beginning factory construction in the U.S.
For battery makers, it'll be about gradually switching mining investment to other countries like Australia and Chile.
Currently, Korea depends on China for the mining of the raw materials used to make batteries.
Minister Lee Chang-yang added that South Korea's response has been the fastest among other countries that're expected to feel the effects of the new U.S. laws.
"As part of the efforts, a ministry official will visit the U.S. for high-level consultation on the laws with Washington before the end of August, while the Trade Minister is planning to visit in September. Shin Ha-young, Arirang News."
Reporter : hyshin@arirang.com
Korea to seek joint response with EU over
Biden’s bill
Industry Ministry says WTO complaint over anti-inflation act is last resort
By Kim Yon-se
Published : Aug 25, 2022 -
Industry Minister Lee Chang-yang (right) speaks during a meeting with business leaders to take countermeasures against the US move to take a protective trade stance over some industrial sectors, such as semiconductors and electric vehicles, in Seoul on Thursday. (Yonhap)
SEJONG -- The South Korean government is to seek a joint response with the EU to deal with the US Inflation Reduction Act that slashes subsidies to electric vehicles not made on American soil, rather than seeking dispute settlement within the bilateral trade agreement frame the two forged years ago.
Seoul would continue to raise arguments that the US law goes against the Korea-US Free Trade Agreement, but a joint response scenario with other countries seems more feasible to press Washington than filing the case straight to the World Trade Organization, Industry Minister Lee Chang-yang said, adding he would visit the US next month.
Calling the a complaint “a last resort,” Chung Dae-jin, deputy trade minister, said the government will initiate consultations next month with the US and EU nations who also face damages.
According to the Ministry of Trade, Industry and Energy on Thursday, the move comes amid a situation where the US is set to prevent global chipmakers -- which are offered incentives and tax benefits in the US market -- from newly investing in the Chinese market for the next decade.
For the automobiles sector, the US is moving to offer a variety of benefits to only carmakers that produce electric vehicles at factories in the North American market.
The US has also specified that the electric vehicles should be powered by batteries produced in North America to satisfy the requirement of state subsidies.
These regulations are based on the Inflation Reduction Act and the Chips Act, both of which have passed through the US Congress.
The Industry Ministry held an emergency meeting with business leaders from the three industrial segments in Seoul on the day, saying the Korean government would not spare any effort to map out measures in close collaboration with the private sector.
Participants included executives from Samsung Electronics, SK hynix, Hyundai Motor, LG Energy Solution, Samsung SDI, SK On and business lobbies for semiconductors, automobiles and batteries.
The ministry said it would continue to hold talks with the US Department of Commerce in a bid to garner exemptions from the list of chipmakers that would be banned from investing in China and some other markets for 10 years in return for enjoying the coming incentives between 2022 and 2026 and tax deductions of 25 percent in the US.
The ministry said it “would bolster partnerships, which have already been fostered with the Commerce Department, if necessary, and actively utilize communication channels on bilateral supply chains” in an effort to minimize damages on the local semiconductor industry.
In the automobiles sector, the Industry Ministry forecasts that electric vehicles shipped to the US from Korea, Japan, Germany and Sweden will be excluded from the list of subsidy targets, as the US specified that it would apply the subsidy requirement of EVs, finally assembled in the US, starting from later this year.
Further, the EVs should meet the requirement of using batteries produced in the US.
Korea, which exported 32,000 EVs in 2021, may possibly take a joint action with the European Union, saying that few global EV producers could satisfy the strict requirements.
By Kim Yon-se (kys@heraldcorp.com)
Industry Ministry says WTO complaint over anti-inflation act is last resort
By Kim Yon-se
Published : Aug 25, 2022 -
Industry Minister Lee Chang-yang (right) speaks during a meeting with business leaders to take countermeasures against the US move to take a protective trade stance over some industrial sectors, such as semiconductors and electric vehicles, in Seoul on Thursday. (Yonhap)
SEJONG -- The South Korean government is to seek a joint response with the EU to deal with the US Inflation Reduction Act that slashes subsidies to electric vehicles not made on American soil, rather than seeking dispute settlement within the bilateral trade agreement frame the two forged years ago.
Seoul would continue to raise arguments that the US law goes against the Korea-US Free Trade Agreement, but a joint response scenario with other countries seems more feasible to press Washington than filing the case straight to the World Trade Organization, Industry Minister Lee Chang-yang said, adding he would visit the US next month.
Calling the a complaint “a last resort,” Chung Dae-jin, deputy trade minister, said the government will initiate consultations next month with the US and EU nations who also face damages.
According to the Ministry of Trade, Industry and Energy on Thursday, the move comes amid a situation where the US is set to prevent global chipmakers -- which are offered incentives and tax benefits in the US market -- from newly investing in the Chinese market for the next decade.
For the automobiles sector, the US is moving to offer a variety of benefits to only carmakers that produce electric vehicles at factories in the North American market.
The US has also specified that the electric vehicles should be powered by batteries produced in North America to satisfy the requirement of state subsidies.
These regulations are based on the Inflation Reduction Act and the Chips Act, both of which have passed through the US Congress.
The Industry Ministry held an emergency meeting with business leaders from the three industrial segments in Seoul on the day, saying the Korean government would not spare any effort to map out measures in close collaboration with the private sector.
Participants included executives from Samsung Electronics, SK hynix, Hyundai Motor, LG Energy Solution, Samsung SDI, SK On and business lobbies for semiconductors, automobiles and batteries.
The ministry said it would continue to hold talks with the US Department of Commerce in a bid to garner exemptions from the list of chipmakers that would be banned from investing in China and some other markets for 10 years in return for enjoying the coming incentives between 2022 and 2026 and tax deductions of 25 percent in the US.
The ministry said it “would bolster partnerships, which have already been fostered with the Commerce Department, if necessary, and actively utilize communication channels on bilateral supply chains” in an effort to minimize damages on the local semiconductor industry.
In the automobiles sector, the Industry Ministry forecasts that electric vehicles shipped to the US from Korea, Japan, Germany and Sweden will be excluded from the list of subsidy targets, as the US specified that it would apply the subsidy requirement of EVs, finally assembled in the US, starting from later this year.
Further, the EVs should meet the requirement of using batteries produced in the US.
Korea, which exported 32,000 EVs in 2021, may possibly take a joint action with the European Union, saying that few global EV producers could satisfy the strict requirements.
By Kim Yon-se (kys@heraldcorp.com)
‘Inflation law may disrupt Korean exports of
100,000 plus EVs’
By Kim Da-sol
Published : Aug 25, 2022 -
Manufacturing line for Ioniq 5 inside Hyundai Motor Group’s Ulsan production plant.
By Kim Da-sol
Published : Aug 25, 2022 -
Manufacturing line for Ioniq 5 inside Hyundai Motor Group’s Ulsan production plant.
(Hyundai Motor Group)
South Korean carmakers on Thursday said at least 100,000 electric vehicles built here would face disruption in export sales annually under the new US law, which excludes battery-powered vehicles made outside of the US from tax credits. They also urged the South Korean government to revise the current subsidy law and map out temporary measures for local carmakers, such as tax credits.
According to the Korea Automobile Manufacturers Association, of which Hyundai Motor and Kia are members, the new US law would hit hard not only Korean carmakers, but also some 13,000 subcontracted auto parts makers here who are already going through hard times due to a dramatic shift from combustion engine cars to electrified models.
As Hyundai and Kia make all their flagship EV models at domestic plants, they fear losing market competitiveness over the axed subsidies for foreign EV makers.
KAMA emphasized that Korean carmakers have hired over 100,000 US nationals through more than $13 billion in investments there over the past three decades. Korea has also subsidized EVs imported from the US in accordance with the US-Korea Free Trade Agreement.
In May, Hyundai Motor Group signed a $5.5 billion plan to build EV and battery manufacturing facilities in the US state of Georgia –- the first of its kind outside Korea.
“The US Inflation Reduction Act will constrict the South Korean production of EVs, and even negatively impact the country’s future mobility competitiveness and workforce in the EV sector,” said KAMA Chairman Chung Man-ki, adding that the South Korean government should review the current EV subsidy law and reexamine the system to soften the damage to local carmakers.
By Kim Da-sol (ddd@heraldcorp.com)
South Korean carmakers on Thursday said at least 100,000 electric vehicles built here would face disruption in export sales annually under the new US law, which excludes battery-powered vehicles made outside of the US from tax credits. They also urged the South Korean government to revise the current subsidy law and map out temporary measures for local carmakers, such as tax credits.
According to the Korea Automobile Manufacturers Association, of which Hyundai Motor and Kia are members, the new US law would hit hard not only Korean carmakers, but also some 13,000 subcontracted auto parts makers here who are already going through hard times due to a dramatic shift from combustion engine cars to electrified models.
As Hyundai and Kia make all their flagship EV models at domestic plants, they fear losing market competitiveness over the axed subsidies for foreign EV makers.
KAMA emphasized that Korean carmakers have hired over 100,000 US nationals through more than $13 billion in investments there over the past three decades. Korea has also subsidized EVs imported from the US in accordance with the US-Korea Free Trade Agreement.
In May, Hyundai Motor Group signed a $5.5 billion plan to build EV and battery manufacturing facilities in the US state of Georgia –- the first of its kind outside Korea.
“The US Inflation Reduction Act will constrict the South Korean production of EVs, and even negatively impact the country’s future mobility competitiveness and workforce in the EV sector,” said KAMA Chairman Chung Man-ki, adding that the South Korean government should review the current EV subsidy law and reexamine the system to soften the damage to local carmakers.
By Kim Da-sol (ddd@heraldcorp.com)
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