S. Korea seeks 'political' solution to U.S. inflation law: industry minister | Yonhap News Agency

S. Korea seeks 'political' solution to U.S. inflation law: industry minister | Yonhap News Agency

WASHINGTON, Sept. 20 (Yonhap) — South Korea hopes to find a political solution to the new U.S. law on inflation that excludes South Korean-made electric vehicles (EVs) from U.S. tax benefits, South Korean Industry Minister Lee Chang-yang said Tuesday.

Lee made the remarks shortly after arriving in Washington for a meeting with U.S. Secretary of Commerce Gina Raimondo.

“The essence of the Inflation Reduction Act (IRA) is that it is a law legislated by Congress, (which means) discussions between administrations will unlikely have any direct impact on Congress,” the South Korean minister said.

“It is not easy to address the issue from an economic perspective since it was made from a political perspective,” he added.

The IRA offers a tax credit of up to US$7,500 to each buyer of a new EV assembled in North America, thereby excluding all South Korean-made electric cars from the benefit.

Seoul has repeatedly pointed out that the new U.S. law may violate the Korea-U.S. free trade agreement, which guarantees equal treatment of products from each country as domestic goods.

The IRA may also breach the most favored nation principle, which is based on the idea that countries should treat all their trade partners equally, according to Seoul officials.

The U.S. has acknowledge potential problems with the IRA and agreed to form a direct dialogue channel with Seoul to specifically discuss the issue, according to South Korean officials, including Trade Minister Ahn Duk-geun, who visited Washington earlier this month.

“The IRA was legislated in a very short span of time, and thus (the U.S.) had somewhat failed to gather the views of interested-parties such as South Korea, Japan and EU, and efforts by the (U.S.) administration may not lead to a revision,” said Lee, highlighting the need for what he called a political solution.

“I plan to negotiate with a different method this time. Instead of highlighting or complaining about our damage, I plan to earnestly point out what kind of problems and errors there are in the IRA and so it will cause a controversy within the (U.S.) government,” he added.

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