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| Minister for Trade Ahn Duk-geun, right, poses with U.S. Trade Representative Katherine Tai as the two had a talk on the U.S. Inflation Reduction Act in Washington, D.C., Dec. 8. Courtesy of Ministry of Trade, Industry and Energy |
Government officials and lawmakers urged officials of the U.S. administration and Congress to support a revision to the U.S. Inflation Reduction Act (IRA), as they claimed the current bill will weaken the competiveness of Korean carmakers and electric vehicle (EV) battery makers when enacted in 2023, the trade ministry said Friday.
Trade Minister Ahn Duk-geun and a group of lawmakers including Rep. Youn Kwan-suk, a lawmaker of the main opposition Democratic Party of Korea (DPK), visited Washington, D.C., this week to persuade U.S. officials in the administration and Congress to deliver opinions from the Korean government and companies that the IRA should be revised.
The Ministry of Trade, Industry and Energy said the Korean delegation had meetings during their visits with key figures such as Senator Tom Carper, who chairs the Senate Committee on Environment and Public Works, Rep. Richard Neal, who chairs the House Committee on Ways and Means, and U.S. Trade Representative Katherine Tai.
The trade ministry said the U.S. officials agreed that there are issues in the current IRA that prohibits Korea's carmakers and battery makers from doing business in the U.S.
However, the ministry added the officials indicated that it will be difficult to pass the IRA amendment within the current session because many members of the Senate and the House of Representatives are currently in a "lame-duck session," a period between the general election in November and the start of the next legislative session in January.
"The U.S. lawmakers agreed that the IRA issue is serious enough, and the two countries should find a balanced solution to prevent the issue from hindering the Korea-U.S. alliance. But many lawmakers there expressed their opinion that passing the IRA amendment during the lame-duck period would not be easy due to the time constraints and the political landscape," the trade ministry said.
The IRA posed a serious problem to the Korean industry since it became law in August. According to the new law, consumers who purchase EVs assembled or manufactured outside North America are unable to qualify for a tax credit of $7,500.
Starting next year, the IRA will also require EVs qualifying for the tax credit to use battery materials sourced from the U.S. or countries with which it has free trade agreements. Also, components of the EV batteries need to be manufactured or assembled in North America.
Both the U.S. Senate and the House of Representatives have proposed amendments to the IRA. The proposals aim to suspend the tax credit requirement for three years.
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