Seoul trade minister says Washington’s actions will have discriminatory impact on South Korean and European producers
Seoul and Brussels should coordinate their responses to a large-scale subsidy package adopted by the United States, South Korean Commerce Minister Dukgeun Ahn said in an interview with EURACTIV on Friday.
The Inflation Reduction Act (IRA), a $430 billion climate protection and social investment plan passed by the US Congress in August, is designed to fight inflation and reduce energy prices, as well as to combat climate change.
However, it also includes massive subsidies for US-produced electric cars and batteries, raising serious concerns that European and South Korean manufacturers will be significantly disadvantaged.
Ahn said South Korea and the European Union should work together to develop a response to the IRA, which was passed by Congress in August. The EU says the law violates competition rules because it offers incentives to buyers of US electric vehicles.
“We have huge leeway for the EU and Korea to work together and do the [IRA] system more compatible with the WTO, so as not to cause unnecessary problems for strategically important parts of our industry”, Ahn said.
However, he expressed doubts about the possibility of changing the law in the short term.
Ahn suggested that the EU and South Korea could work with the US administration “to minimize the discriminatory impact of the IRA”, which offers generous tax breaks to American companies that invest in clean energy and significant subsidies for household electric vehicles, batteries and renewable energy projects.
“If it becomes apparent that there is nothing they can do or show no willingness to work with us to find an appropriate solution, we will have to find another alternative,” he said.
European Commission President Ursula von der Leyen had previously called for “action” and increased state aid for her own businesses in response to the US measures. Bernd Lange, head of the European Parliament’s trade committee, said the EU should file a complaint with the World Trade Organization (WTO) against the law.
For more stories on economics and finance, visit RT’s business section
You can share this story on social media: