"South Korean Automotive and Electronics Companies May Face Heavy Fines Under EU AI Act Enforcement"

The European Union (EU) is set to become the first in the world to implement an Artificial Intelligence Act (AI Act), raising concerns that many Korean companies equipped with AI technology could face hefty fines. To avoid this, experts advise that companies consider the AI legislation from the product planning and development stages.

Jung Jae-wook, Science Attach? at the Embassy of Korea in Belgium and the EU, explained at the 'EU Economic Issues Briefing' hosted by the embassy in Brussels on the 15th (local time), "The EU AI Act applies not only to AI system providers but also to distributors who manufacture products using AI."

Jung added, "Almost all Korean companies will be subject to this. Manufacturers of electronic devices or automobiles equipped with AI systems are all included," emphasizing, "It is necessary to consider the AI Act from the product planning and development stages going forward."

On the 15th (local time), participants are taking a commemorative photo at the 'EU Economic Issues Meeting' held in Brussels, Belgium.
[Photo by Yonhap News]

The AI Act, the first comprehensive regulation of its kind established by the EU, serves as a foundational law. The legislative process is nearly complete, and it is expected to be enacted next month after final approval by the Council composed of the 27 EU member states.

The AI Act categorizes AI risk levels into four tiers, including high-risk, and applies differentiated regulations accordingly. It also includes provisions regulating general-purpose AI in response to the emergence of generative AI such as ChatGPT. The Act explicitly bans certain types of AI across the EU, such as real-time remote biometric recognition and the creation of facial recognition databases.

Full enforcement will begin 24 months after enactment, around 2026, but regulations concerning prohibited AI types will take effect six months after enactment, and general-purpose AI regulations will be enforced 12 months after enactment. Violations can result in fines of up to 7% of global annual turnover.

Jung noted, "Following the implementation of the EU Digital Services Act (DSA) and Digital Markets Act (DMA), investigations targeting major corporations have been conducted consecutively," and predicted, "The AI Act will similarly impose various obligations on our companies as soon as it is enforced."