Kwon Seong-dong "Exclusion from Subsidy Support May Conflict with Korea-US FTA"
Resolution at National Assembly Level Also Proposed
Lee Won-wook "Resolution Urging Non-Discrimination in Tax Support" Prepared
[Asia Economy Reporters Juyoun Oh and Hyunji Kwon] The ruling and opposition parties have united in rare agreement to criticize the ‘Inflation Reduction Act (IRA)’ amid controversy over the exclusion of Korean-made vehicles from the US electric vehicle subsidy program. Both parties have urged the government to negotiate with the US to ensure Korean electric vehicles receive equal treatment as North American-made vehicles, and they have also decided to push for a resolution at the National Assembly level.
Kwon Seong-dong, floor leader of the People Power Party, stated at the party’s strategy meeting on the 19th that the US exclusion of Korean vehicles from the electric vehicle subsidy under the Inflation Reduction Act "is highly likely to conflict with the Korea-US Free Trade Agreement (FTA)" and pointed out that "above all, the US’s discriminatory tax measures contradict the spirit of strengthening the economic security alliance between Korea and the US." He urged the government to "immediately begin negotiations with the US government to ensure Korean electric vehicles are treated equally with North American-made vehicles" and emphasized that "support measures such as temporary subsidies or corporate tax reductions for affected automakers and related companies should also be actively considered." He added, "Institutional design and reform based on fair reciprocity are urgently needed," and promised that "the National Assembly will actively support this through necessary legislation."
The Democratic Party is preparing to propose a resolution. Lee Won-wook, a member of the National Assembly’s Foreign Affairs and Unification Committee, plans to soon introduce a resolution titled ‘Resolution Urging the Prohibition of Discriminatory Tax Support on Imported Electric Vehicles and Batteries by the US.’ The resolution will point out that the electric vehicle subsidy reform included in the Inflation Reduction Act violates the Korea-US FTA and will urge both governments to ensure that batteries using parts manufactured or assembled in Korea and Korean electric vehicles receive equal tax benefits in the US.
In particular, since subsidies are provided for US-imported electric vehicles in Korea, the resolution highlights that Korean products, which should receive ‘equal treatment’ under the Korea-US FTA, are being unilaterally discriminated against by this reform. Regarding this, Lee said at the Foreign Affairs and Unification Committee’s full meeting the day before, "Korea provides subsidies to US-made electric vehicles without discrimination, but under the Inflation Reduction Act, Korean vehicles will not be able to receive subsidies of around 10 million won, which will cause very serious damage." In a conversation, Lee emphasized, "We must prevent a situation where only Korean vehicles suffer damage," and added, "I hope the National Assembly’s actions can urge the government to respond."
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