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S. Korea, US discuss Inflation Reduction Act, chips subsidy rules

Nov. 30, 2023 - 19:23 By Yonhap

Trade Minister Ahn Duk-geun delivers a speech during an international conference on industry security in Seoul, Nov. 22, 2023. (Yonhap)

South Korea's Trade Minister Ahn Duk-geun met with the US White House Deputy National Security Advisor Mike Pyle on Thursday for talks on lingering uncertainties regarding the Inflation Reduction Act (IRA) and other trade issues of mutual concerns, Seoul's industry ministry said.

Ahn asked the US official to pay close attention to South Korean firms' concerns about the potential impact of the IRA, which provides tax credits of up to $7,500 to buyers of electric vehicles (EVs) that are assembled only in North America.

It also requires EV batteries to be made with a certain portion of minerals mined or processed in the US or countries that have free trade agreements with Washington.

"Ahn stressed that the envisioned IRA guidance should take into consideration the structure and the stability of the global supply chains of major minerals and battery components," the ministry said in a release.

The United States is expected to present guidance on "foreign entities of concern" rules, or FEOC, early next month that exclude battery manufacturers under the control of China, Russia and other nations of concern from incentives under the IRA.

South Korean companies have maintained partnerships with Chinese entities for EV and battery production.

Ahn also called for Washington's attention to South Korean companies making an investment in the US over the course of its implementation of the CHIPS and Science Act.

Under the act, foreign chipmakers can receive subsidies and tax incentives for setting up production facilities in the US, though the act came with strings attached.

It also prohibits the material expansion of semiconductor manufacturing capacity for advanced facilities in "foreign countries of concern" for 10 years from the date of award in an apparent bid to slow China's technological advances.

The US' Section 232 tariff rules were also an agenda item for Thursday's meeting.

South Korea has sought to begin negotiations to revise the 2018 rules, though the US has maintained a negative stance on beginning talks with South Korea.

Washington wrapped up negotiations on the tariff issue with the European Union, Japan and Britain in 2022.

"The two sides agreed to strengthen bilateral relations in a mutually beneficial way, sharing the assessment that the Korea-US alliance has developed from a traditional security alliance to that on advanced technologies, industry and supply chains," the ministry said in a release. (Yonhap)