Korea to continue negotiations with U.S. over IRA

Economy

Published: 05 Apr. 2023, 16:17

Korea to continue negotiations with U.S. over IRA

Finance Minister Choo Kyung-ho speaks at a ministerial meeting held at the government complex in central Seoul on Wednesday. [NEWS1]

Korea will continue to conduct pan-governmental negotiations with the United States over the Inflation Reduction Act (IRA) to maximize the interests of Korean corporations.

"As much as uncertainties still remain, we will continuously negotiate with the United States and related industries to maximize our corporations’ interests and minimize difficulties,” said Finance Minister Choo Kyung-ho ahead of a closed-door meeting held at the government complex in central Seoul on Wednesday.

The meeting was attended by ministers and vice ministers of relevant ministries, including the Ministry of Trade, Industry and Energy.

The U.S. IRA aims to catalyze investments in domestic manufacturing capacity and encourage procurement of essential supplies domestically or from free-trade partners, ostensibly to reduce carbon emission reductions, but also likely to curb China's rise.

The U.S. Treasury Department announced new guidelines of the act last week.

While the new guidelines largely reflect Korea’s positions, ambiguity remains, Seoul says.

“Uncertainties remain regarding conditions for receiving semiconductor subsidies, how much information needs to be submitted in the process of applying for them, and export restrictions on chip equipment,” Choo said.

Choo further vowed to work with Europe on its establishment of green subsidies.

Choo said the government will also negotiate with the EU to make sure Korea’s stance is properly reflected, considering that the legislative procedure typically takes around two years.

He added the government will reduce the burden on corporations and help them develop technologies that can reduce carbon emissions.

Europe is pushing the Critical Raw Materials Act, aimed to ensure the EU’s access to a secure and sustainable supply of critical raw materials, and the Net-Zero Industry Act, which aims to promote green technology development in the EU to accelerate the region's transition to decarbonization.

Brussels announced proposals for the acts last month, which Korea’s trade ministry said are “not discriminatory, unlike the U.S. IRA.”

Korea will also diversify free-trade partners to expand export markets.

Choo said Korea will continue efforts to diversify its trade portfolio and speed up free-trade negotiations, including those with Ecuador and the Gulf Cooperation Council (GCC), a regional organization with six members, including Saudi Arabia, UAE and Qatar.

Korea held a seventh round of negotiation with the GCC on free trade in February.

Korea will also launch negotiations with Georgia and Mongolia in the first half of this year to help Korean companies enter overseas market and diversify supply chain networks.

Korea’s exports fell for six months straight in March as global demand for semiconductors remains weak amid an economic slowdown. It also suffered a trade deficit for 13 months in a row.

BY JIN MIN-JI [jin.minji@joongang.co.kr]