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Korea’s Yoon Keen to Discuss Axing of EV Subsidy With Biden

Yoon will meet Biden in New York, where they are expected to discuss North Korea and concerns in Seoul over the climate bill cutting tax credits for electric vehicles made outside the US


South Korean opposition to new EV subsidies in the US could undermine President Yoon's first trip to the US.
South Korea's President Yoon Suk-yeol is due to meet President Biden in New York this week, but the issue of new US subsidy rules for electric vehicles has upset some of his country's biggest companies. File photo from June 30, 2022 by Susana Vera, Reuters.

 

South Korean opposition to new US rules governing subsidies for electric vehicles threaten to undermine President Yoon Suk-yeol’s first official trip to the United States.

Yoon, who was in London for the funeral of Britain’s Queen Elizabeth, departed for New York late on Monday to attend the UN General Assembly.

In New York, Yoon will hold a summit with US President Joe Biden during which both leaders are expected to discuss North Korea‘s growing weapons threats, and mounting concerns in Seoul over the Inflation Reduction Act (IRA), signed by Biden last month.

The new law eliminates federal tax credits for electric vehicles (EVs) made outside North America, meaning companies including Hyundai Motor and its affiliate Kia Corp will no longer be eligible for such subsidies.

The law has sparked complaints from government officials in Seoul, who see it as a betrayal of Biden’s vows to boost bilateral economic ties after South Korean companies agreed to make major investments and build factories in the United States.

Seoul officials have asked Washington to postpone the new rules until Hyundai completes building its Georgia factory in 2025. Yoon is likely to reiterate that request during the upcoming summit.

A number of high-level South Korean officials have been mobilised in recent weeks to relay concerns to their US counterparts and press for exemptions, though solutions are far from clear. Trade Minister Lee Chang-yang will travel to the United States this week to discuss the IRA, the ministry said on Tuesday.

Speaking in Seoul on Tuesday, Prime Minister Han Duck-soo said the IRA “seems to be a violation of the Free Trade Agreement” between the two nations. However, the South Korean government is focusing on bilateral dialogue for now, he said, when answering a lawmaker’s question in parliament.

 

ALSO SEE: Hyundai Motor May Begin Work on US EV Plant This Year

 

 

New Rules to be Reviewed

US national security adviser Jake Sullivan told his South Korean counterpart Kim Sung-han early this month the IRA would bring “more pluses than minuses” to Korea but promised to review the impact of the new rules.

“It’s structurally quite complicated because it’s already signed into law, but there is a way to go about it,” a senior South Korean official closely involved in the discussions said on condition of anonymity due to the diplomatic sensitivity of the issue.

When asked about the IRA, Yoon’s senior economic secretary, Choi Sang-mok, said neither side had yet set an agenda for the summit but could discuss the issue in light of its importance.

Yoon has also been struggling to make headway on other key diplomatic and security issues such as improving relations with Japan and enticing North Korea back to denuclearisation talks.

Yoon’s office said he plans to hold his first bilateral meeting with Japanese Prime Minister Fumio Kishida in New York, though some Japanese media reports suggested the meeting may not happen as legal fights over historic disputes remain unresolved.

South Korean Foreign Minister Park Jin met with his Japanese counterpart in New York on Monday, where he asked the Japanese to work together with Seoul to resolve their differences, Park’s office said in a statement.

According to a senior official at Yoon’s office, the president also plans to use his speech to the UN General Assembly to reiterate the need for North Korea‘s denuclearisation, with Pyongyang rejecting Seoul’s recent overtures and talks remaining stalled.

A diplomatic source said that Seoul and Washington are exploring how to reopen denuclearisation talks.

“Our responses to the North’s recent moves have been low profile, which is intended in order to not give the level of attention they want,” the source said, requesting anonymity due to the sensitivity of the issue.

“But we’re sending a clear message that another nuclear test would trigger real repercussions, even harsher than the biting resolutions and measures taken after the sixth test and long-range missile launches.”

He will fly to Canada on Thursday for the last leg of his trip before returning home on Saturday.

 

  • Reuters with additional editing by Jim Pollard

 

 

ALSO SEE:

 

South Korean Visit to US to Discuss EV Impacts of Climate Bill

 

Korea’s LG Energy Solution Seeks Factory Sites Outside China

 

LG Energy Solution Said to Plan US Battery JV with Honda

 

Hyundai In Talks to Build Georgia EV Factory

 

Hyundai Motor to Start EV Production at US Alabama Plant

 

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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