IRA wish list delivered to U.S. by Korean government
It was replying to a request for public comment issued by the U.S. Department of Treasury and the Internal Revenue Service. The comments from Korea incorporated input from Korean manufacturers.
"The IRA tax credit conditions will have a negative impact not only on Korean EV makers but also those of other countries," the Trade, Industry and Energy Ministry said in a statement, adding that the new law could violate the Korea-U.S. Free Trade Agreement and WTO obligations.
In its submission to the United States, the ministry requested a three-year suspension on the domestic manufacturing requirement for companies already building EV plants in the United States. It also asked for the "final assembly" requirement be adjusted to "partial assembly."
The ministry said that the law should allow for the purchase of key minerals from countries that do not have free trade agreements (FTA) with the United States and requested that the calculation for sourcing be done in a certain way. Rather than measuring ratios by input, the ministry asked that U.S. authorities use an overall ratio to test whether a product meets IRA sourcing requirements.
Under the terms of the IRA, buyers of EVs are eligible for a $7,500 tax credit only if the vehicles are assembled in the United States. The batteries in the cars must meet strict content-sourcing requirements, in which a certain percentage of minerals and components must come from countries that have signed FTAs with the United States.
Hyundai Motor is building an EV assembly plant in the United States that will be completed in 2025.
In a submission separate from the submission from the Korean Government, Hyundai Motor said companies that have promised to build an EV plant in the United States should be deemed as complying with the law.
"A grace period should be allowed,” the Korean carmaker said in a statement.
The United States has warned Korea that the IRA is a law that can only be amended by Congress.
"The legislation is what it is," Janet Yellen said last week.
Implementation of the law does offer some opportunity.
“We’re early on in the process for writing rules,” Yellen said. “I gave my assurance that we would listen to their concerns and see what was in the range of the feasible as we implement the rules.”
The Korean government has hired Lee & Ko for work related to the IRA, though no details about the scope of the engagement have been released.
BY LEE HO-JEONG [firstname.lastname@example.org]