December 1, 2022

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Yoon Suk Yeol Refuses to Abolish Hyundai-Kia Electric Car Subsidy in the US, Why?

South Korean President Yoon-Suk Yeol rejected the unilateral removal of import duty subsidies on Hyundai and Kia electric cars by the United States government. The provisions contained in the Inflation Reduction Act (Inflation Reduction Act (IRA)) was rejected by many high-ranking South Korean government officials, including Yoon’s own political party officials, People Power Party, which is the majority party in the South Korean National Parliament.

Launching from Reuters, on Monday (19/9/2022), Yoon continued his state visit from London, England, to New York City, USA, to attend the 77th United Nations General Assembly. On the sidelines of the multilateral-level event, Yoon will hold a bilateral meeting with US President, Joe Biden, at the UN Headquarters, New York City, to discuss North Korea’s efforts to continue to increase the intensity of ballistic missile tests on the Korean Peninsula, as well as convey the rejection of businessmen. and high-ranking South Korean government officials for enacting the IRA law which was passed by the US Congress and signed by Biden on August 16, 2022.

Under the law, the US government through the US Department of the Treasury (US Department of Treasury) will remove import duty subsidies on electric cars manufactured outside North America. As a result, the two South Korean auto giants, Hyundai Motor Co and its subsidiary, Kia Corp, are no longer eligible to receive the import duty subsidy because all of the electric cars of the two companies are produced at factories located in South Korea.

Knowing this provision, high-ranking government officials in Seoul immediately protested to the US government as a form of rejection of the law. They consider that the law is a form of betrayal of Biden’s economic commitments he has made with the South Korean government.

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One of these economic commitments is an investment agreement and economic and trade cooperation between the top companies in the Ginseng State and US manufacturing and technology and communications companies which will be realized by building manufacturing plants in several US states and injecting large amounts of fresh funds for support the company’s operational activities.

In a sideline meeting of the 77th UN General Assembly which will take place in New York City, New York, USA, Yoon will lobby the 47th US president from the Democratic Party to delay the implementation of the new provisions until Hyundai is able to complete construction of the factory located in state of Georgia by 2025.

In recent weeks, top South Korean officials have garnered political support from businessmen and lawmakers across factions to convey their disapproval to top US officials. South Korea’s Trade Minister, Lee Chang-Yang, is set to accompany Yoon in a meeting with Biden to discuss the IRA law.

In his official statement in Seoul on Tuesday (20/2/2022), South Korean Prime Minister Han Duck-Soo said that the US had violated the commitments of the Free Trade Agreement.Free Trade Agreement) with South Korea after passing the IRA law along with the US Congress. Even so, the South Korean government will focus on conveying the rejection through bilateral dialogue, in which the results of the talks will be presented to members of parliament.

One senior South Korean official in Seoul said that while it was difficult to overcome, there was an opportunity for South Korea to ask the US to delay enactment of the IRA law. “Structurally, this problem is difficult to overcome because the IRA law has been officially signed into national law. However, there is still a way for us to lobby the US to delay enactment (IRA law),” said the senior official who did not want to be named.

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National Economic Adviser Choi Sang-mok said the US and South Korean governments did not plan a meeting on the sidelines of the 77th UN General Assembly. Even so, seeing that many South Korean economic interests will be sacrificed as a result of the law, the South Korean government will continue to carry out various political lobbies until the US government is again willing to discuss the issue.

One week earlier, South Korea’s National Security Adviser, Kim Sung-han, held a bilateral meeting with the United States’ National Security Adviser, Jake Sullivan, to raise the South Korean government’s concerns about the trade impact of the IRA legislation on Korean electric car exports. South to the US.

Yonhap News Agency Launching, after the meeting, Kim stated that the United States would conduct a review of the impact of the enactment of the law.

He (Sullivan) said that (the US government) will look again in detail on how far the issue of removing the electric car import duty subsidy can progress and the impact that the law will have,Kim said at a press conference that took place in Honolulu, Hawaii, on Wednesday (14/9/2022) local time.

The South Korean government considers the US government to review the IRA law, given the concerns of South Korean auto giants, namely Hyundai and Kia, regarding the emergence of trade barriers in the form of high import duties due to the absence of tax incentives that can reduce costs. import duties significantly.

High import duties make companies have to spend more money to pay import duties Internal Revenue Services (IRS), an agency under the coordination of the US Department of the Treasury in charge of collecting taxes on foreign companies operating in the US, including import duties on foreign goods and services imported by the US. This of course has an impact on increasing the selling price of cars in the US domestic market, so the company’s management will prefer to reduce the number of electric cars that will be exported to the US because the selling prices cannot compete with the cheaper selling prices of electric cars produced by Tesla.

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