WASHINGTON, Sept. 20 (Yonhap) -- South Korea hopes to find a political solution to the new US law on inflation that excludes South Korean-made electric vehicles (EVs) from US tax benefits, South Korean Industry Minister Lee Chang-yang said Tuesday.
Lee made the remarks shortly after arriving in Washington for a meeting with US 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 $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 US law may violate the Korea-US 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 US has acknowledged 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 US) had somewhat failed to gather the views of interested-parties such as South Korea, Japan and EU, and efforts by the (US) 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 controversy within the (US) government," he added.
Lee later explained he plans to highlight the political impact of the US law when he meets his US counterpart.
"There are many other areas the US and we need to cooperate, and I will point out that (the countries) may lose more than they gain if their relationship worsens due to IRA-related issues," he said while meeting with reporters.
"I will talk about the big picture that the US and South Korea must paint politically while stressing the need to manage the issue so that it will not create any constraining elements," Lee added about his meeting with Secretary Raimondo, which will be held here Wednesday.
The South Korean minister also underlined a need to work with other countries whose businesses may be placed at a disadvantage by the IRA, such as Japan and EU nations. (Yonhap)
