South Korea’s Yoon asks Biden to resolve concerns about electric vehicle subsidy rules

South Korea’s Yoon asks Biden to resolve concerns about electric vehicle subsidy rules

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by Hyonhee Shin

SEOUL (Reuters) – South Korean President Yun Seok-yeol has asked U.S. President Joe Biden to help address Seoul’s concerns that new U.S. rules on electric vehicle subsidies will harm the country’s automakers, Yoon’s office said on Thursday.

Seoul’s opposition to the US inflation-reduction law, which Biden signed last month, has cast a shadow over Yun’s first trip to the US since taking office in May.

The new law eliminates federal tax credits for electric vehicles (EVs) made outside of North America, meaning companies like Hyundai Motor Co. and its subsidiary Kia Corp will no longer qualify.

Yoon relayed those concerns to Biden in London, where the two leaders attended the funeral of Britain’s Queen Elizabeth, and again in New York on Wednesday on the sidelines of the United Nations General Assembly, his office said.

“President Yun has requested close cooperation so that the US administration can resolve our concerns in the implementation of the Inflation Reduction Act,” Yoon’s office said in a statement.

It added that Biden said he was “well aware” of South Korea’s concerns and asked to continue discussions.

The White House said the two leaders discussed a wide range of issues including supply chain resilience, economic security, energy security and climate change, but it made no mention of electric vehicle credits.

Seoul views the IRA as a betrayal of Biden’s pledges to boost economic ties after South Korean companies unveiled bold investment plans in the United States.

The US Commerce Department had earlier alluded to the tensions between the two countries after a meeting between US Commerce Secretary Gina Raimondo and South Korean Trade Minister Lee Chang-yang in Washington on Wednesday.

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The newspaper said the pair “exchanged frank views on US concerns about pending legislation in South Korea to charge network usage fees to foreign content providers and South Korea’s concerns about tax credits for electric vehicles.”

In South Korea, there is a legislative push to require overseas content providers including Netflix (NASDAQ:) and Alphabet (NASDAQ: Google) to pay local network fees.

Seoul’s Commerce Department said Raimundo sympathized with Seoul’s concerns about the IRA and pledged to continue consultations.

“Our side has clearly expressed concern that (the IRA) is not compatible with US endeavors to cooperate in the supply chain and will have a negative impact on future projects,” he said in a statement.

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