South Korea's economic bodies urge revision of US Inflation Reduction Act

Six leading economic organizations in South Korea have sent a joint letter to the US government and Congress requesting revision of the US Inflation Reduction Act (IRA), complaining of clauses that discriminate against Korean-made electric vehicles (EVs).

The Korean Chamber of Commerce and Industry (KCCI), Korea International Trade Association, Federation of Korean Industries, KBIZ Korea Federation of SMEs, Korea Enterprises Federation and Federation of Middle Market Enterprises in Korea on Thursday said the letter was sent to leading senators and congressional members as well as government officials to express the Korean business community's concerns over select clauses of the act.

In the letter, the six bodies stressed how the Korean corporate sector has aggressively supported the expansion of economic cooperation between the two countries, from the signing of a bilateral free trade agreement (FTA) to joining the US-led Indo-Pacific Economic Framework.

Major Korean conglomerates have fueled job creation and regional development in the US through consistent investment, the letter added, and their announcement this year of large-scale investment plans show their crucial role in bilateral economic cooperation.

"The IRA has a high probability of violating international trade rules and those of the Korea-US FTA by providing tax credits to electric vehicles produced in North America only and stipulates the use of battery parts made there above a certain ratio," it said.

"The current IRA rules that discriminate against EVs made in an allied country do not match fit the condition for raising bilateral cooperation," the groups said. "Please lift discriminatory factors so that companies from US allies receive the same tax breaks for EVs and battery parts as those made in North America."

The KCCI said the letter sent in the name of the six bodies went to 10 members of the US Senate and House of Representatives, Treasury Secretary Janet Yellen, Energy Secretary Jennifer Granholm, Commerce Secretary Gina Ramondo and US Trade Representative Katherine Tai.

Washington is conducting a second round of opinion gathering on IRA from each country.

The first round collected opinions through Nov. 4. The Korean Ministry of Trade, Industry and Energy also through a written opinion expressed its views to the U.S. Treasury Department on IRA's regulations on EVs.

The document said the requirements for IRA's tax credits for eco-friendly vehicles could violate international trade rules like those of the bilateral FTA and the World Trade Organization. Hyundai Motor Group has also sent a document with a similar opinion to Washington.

Write to Il-Gue Kim at black0419@hankyung.com