[Exclusive] US 'Inflation Reduction Act' Prompting Response in National Assembly... Resolution to Urge Non-Discrimination in Tax Support Prepared

Democratic Party Rep. Lee Won-wook: "Korean Products Deserve Equal Treatment, Facing Unilateral Discrimination in the U.S."
"Inflation Reduction Act Should Include Korean Electric Vehicles for Tax Credits" Resolution to Be Proposed

[Asia Economy Reporter Oh Ju-yeon] A resolution opposing the U.S. government's 'Inflation Reduction Act (IRA)' and urging non-discriminatory tax support has been prepared under the leadership of opposition party lawmakers in the National Assembly. Lawmakers from both ruling and opposition parties agree on the purpose and content of the resolution, and since it is a non-contentious political issue, it is expected to pass smoothly through the Foreign Affairs and Unification Committee, the relevant standing committee of the National Assembly. Following the recent expression of concerns by the Ministry of Foreign Affairs to the U.S., voices calling for smooth negotiations between South Korea and the U.S. are also emerging in the National Assembly, drawing attention to whether this movement will help prevent discriminatory treatment of domestic companies operating in the U.S.

[Image source=Yonhap News]

[Image source=Yonhap News]

On the 19th, according to political circles, Rep. Lee Won-wook of the Democratic Party of Korea prepared a 'Resolution Urging the U.S. to Prohibit Discriminatory Tax Support for Imported Electric Vehicles and Batteries' in relation to the Inflation Reduction Act, which excludes Korean-made vehicles from the U.S. electric vehicle subsidy program.

In the resolution, Rep. Lee expressed strong concerns about the discrimination between North American and imported electric vehicles and batteries in the electric vehicle tax provisions of the Inflation Reduction Act. He pointed out in detail that under the Korea-U.S. Free Trade Agreement (FTA), subsidies are provided not only for domestically produced vehicles in Korea but also for U.S.-imported electric vehicles. However, under the new amendment, Korean-made vehicles will not receive tax support in the U.S., resulting in unilateral discrimination against Korean products that should receive 'equal treatment.'

He urged the U.S. government to include Korean-made electric vehicles as eligible for tax credits under the Inflation Reduction Act and to comply with international norms such as the Korea-U.S. FTA. At the same time, he requested the Korean government to actively respond to ensure that Korean electric vehicle and battery companies are not discriminated against in the U.S. market.

Accordingly, the resolution includes ▲ an expression of concern that the discriminatory tax benefits under the Inflation Reduction Act violate the Korea-U.S. FTA ▲ urging the U.S. government to promote the spread of eco-friendly vehicles including electric vehicles ▲ active negotiations by both governments to prevent unfair treatment and damage to Korean companies ▲ and international community efforts to address the climate crisis.

In a phone interview with Asia Economy, Rep. Lee emphasized, "We must prevent situations where only Korean-made vehicles suffer damage," adding, "I hope this movement at the National Assembly level will urge the government to respond."

At the full meeting of the Foreign Affairs and Unification Committee held at the National Assembly the previous day, Rep. Lee said, "In Korea, subsidies are provided to U.S.-made electric vehicles without discrimination, but under the Inflation Reduction Act, Korean vehicles will not be able to receive subsidies of about 10 million won, which will cause very serious damage," and added, "I hope the Foreign Affairs and Unification Committee will discuss this early and push for grounds to ensure that Korean cars are not discriminated against in the U.S. market and that exports continue smoothly."

Rep. Lee requested the standing committee to propose and approve the resolution at the Foreign Affairs and Unification Committee meeting held that morning, but since consultation between ruling and opposition party floor leaders is necessary, the resolution is expected to be handled at the next meeting. At the meeting, Rep. Lee said, "If the two floor leaders from both parties adjust the wording, the committee can immediately pass the resolution and it can be approved at the next plenary session. I ask the chairman to consider this proactively." In response, Yoon Jae-ok, chairman of the Foreign Affairs and Unification Committee, said, "There is no disagreement on the purpose of Rep. Lee's resolution, but it is difficult to finalize the content today," and added, "We will try to have consultations between the floor leaders of both parties as soon as possible and approve it at the next standing committee meeting."

Meanwhile, the Inflation Reduction Act, signed by U.S. President Joe Biden on the 16th (local time), includes massive investments to address climate change and some tax increases. However, the electric vehicle tax provisions specify that subsidies will only be provided for vehicles produced within the U.S., raising controversy over discriminatory subsidies against Korean-made vehicles. To receive a total subsidy of $7,500 (about 9.8 million won) per vehicle, electric vehicles must be produced in the U.S., but currently, Hyundai Ioniq 5 and Kia EV6, which are sold in the U.S., are all produced in Korea. As a result, all five electric vehicle models sold by Hyundai-Kia in the U.S. are excluded from subsidy eligibility.