It examines the root of the conflict affecting the Korean EV and battery industry and the process by which the conflict was seemingly resolved.6 It explains how the law, the regulations Treasury wrote to implement the law, the trade agreements over critical minerals that the USTR is negotiating in light of the law, and the Korean government's own policy response are likely to affect Korean supply chains ...
Furthermore, the government's response to the IRA was to increase subsidies for Korean EV plants locally - its own form of industrial policy - and to provide lending and other financial guarantees to help Korean battery companies seeking to retain access to the US tax credits in the IRA that require them to take substantial investments to orient their supply chains outside of China ...
topIt examines the root of the conflict affecting the Korean EV and battery industry and the process by which the conflict was seemingly resolved.6 It explains how the law, the regulations Treasury wrote to implement the law, the trade agreements over critical minerals...
topFurthermore, the government's response to the IRA was to increase subsidies for Korean EV plants locally - its own form of industrial policy - and to provide lending and other financial guarantees to help Korean battery companies seeking to retain access to the US tax credits in the IRA that...
topIt examines the root of the conflict affecting the Korean EV and battery industry and the process by which the conflict was seemingly resolved.6 It explains how the law, the regulations Treasury wrote to implement the law, the trade agreements...
top... industry and the process by which the conflict was seemingly resolved.6 It explains how the law, the regulations Treasury wrote to implement the law, the trade agreements over critical minerals that the USTR is negotiating in light of the law, and the Korean government's own policy response are likely to affect Korean supply chains
top... the conflict affecting the Korean EV and battery industry and the process by which the conflict was seemingly resolved.6 It explains how the law, the regulations Treasury wrote to implement the law, the trade agreements over critical minerals that the USTR is negotiating in light of the law, and the Korean government's own policy response are likely to affect Korean supply chains
topThe Biden administration has actively encouraged other key economies to subsidize their clean energy industries and in early 2023, the Korean government implemented new policies, including an industrial policy for its EV plants and support for its considerable battery industry
top... industrial policy - and to provide lending and other financial guarantees to help Korean battery companies seeking to retain access to the US tax credits in the IRA that require them to take substantial investments to orient their supply chains outside of China.
topThe Biden administration has actively encouraged other key economies to subsidize their clean energy industries and in early 2023, the Korean government implemented new policies, including an industrial policy for its EV plants and support for its considerable battery industry
topThe Biden administration has actively encouraged other key economies to subsidize their clean energy industries and in early 2023, the Korean government implemented new policies, including an industrial policy for its EV plants and support for its considerable battery industry
topThe Biden administration has actively encouraged other key economies to subsidize their clean energy industries and in early 2023, the Korean government implemented new policies, including an industrial policy for its EV plants and support for its considerable battery...
top... financial guarantees to help Korean battery companies seeking to retain access to the US tax credits in the IRA that require them to take substantial investments to orient their supply chains outside of China.
topConclusion. The consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government
topKorea has already adjusted its own consumer tax credits for EVs. Furthermore, the government's response to the IRA was to increase subsidies for Korean EV plants locally - its own form of industrial policy - and to provide lending and other...
topYet, the Treasury Department's implementing regulations have accommodated continued growth of Korean exports of EVs to the United States in the nine months since the IRA went into effect
topThe consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government. The Treasury Department implementing regulations may have appeased key interests in Korea and other important US allies, such as the European Union, that manufacture and export EVs
topConclusion. The consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government. The Treasury Department implementing regulations may have appeased key interests in Korea and other important US allies, such as the European Union, that manufacture...
topFurthermore, the government's response to the IRA was to increase subsidies for Korean EV plants locally - its own form of industrial policy - and to provide lending and other financial guarantees to help Korean battery companies seeking to retain access to the US tax credits in the IRA that require them to take substantial investments to...
topKorea has already adjusted its own consumer tax credits for EVs. Furthermore, the government's response to the IRA was to increase subsidies for Korean EV plants locally - its own form of industrial policy - and to provide lending and other financial guarantees to help Korean battery companies seeking to retain access to the US tax credits in the IRA that...
topThe consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government. The Treasury Department implementing regulations may have appeased key interests in Korea and other important US allies, such as the European Union, that manufacture and export EVs
topThe details of how the problem was solved may prove difficult for the Korean public to understand, possibly failing to address the domestic political problem the IRA caused for the Yoon administration.
topThis paper explores the initial impact of the IRA on Korea. It examines the root of the conflict affecting the Korean EV and battery industry and the process by which the conflict was seemingly resolved.6 It explains how the law, the regulations Treasury wrote to implement the law, the trade agreements over critical minerals...
topThis paper explores the initial impact of the IRA on Korea. It examines the root of the conflict affecting the Korean EV and battery industry and the process by which the conflict was seemingly resolved.6 It explains how the law, the regulations Treasury wrote to implement the law, the trade agreements...
top... would remain eligible for the Section 30D tax credits.73 Exactly how was not disclosed; it could involve helping input suppliers to battery companies deepen their ties with source countries outside of China.
topThe details of how the problem was solved may prove difficult for the Korean public to understand, possibly failing to address the domestic political problem the IRA caused for the Yoon administration.
topYet, the Treasury Department's implementing regulations have accommodated continued growth of Korean exports of EVs to the United States in the nine months since the IRA went into effect. Evidence on increasing EV leasing rates for Korean companies is supportive of the interpretation that Treasury's actions helped address Korea's worries
topTreasury's December 29 leasing announcement partly explains why US imports of EVs from Korea continued in the nine months after the IRA went into effect in August 2022 (figure 5).
topFrom Korea's perspective, the main problem was the IRA's Section 30D requirement that, in order to receive the consumer tax credit, the vehicle had to be assembled in North America (table 1).
topto be eligible for the full $7,500 commercial vehicle credit as a way to bypass the strict sourcing requirements in the 30D Clean Vehicle Credit."
topIn the short run, the complaints by Korea and the European Union were the same: The North American assembly criterion in Section 30D of the IRA had eliminated vehicles assembled in their economies from access to the $7,500 consumer tax credit starting on August 16
top... insight from figure 4 is supportive evidence that some entity in the private sector is enjoying the benefits of the tax credit and that this option is a likely contributor to US imports from Korea (and the European Union) continuing to grow (see below) and thus diffusing a potential trade dispute over the IRA
topFrom Korea's perspective, the main problem was the IRA's Section 30D requirement that, in order to receive the consumer tax credit, the vehicle had to be assembled in North America (table 1).
top... complaints by Korea and the European Union were the same: The North American assembly criterion in Section 30D of the IRA had eliminated vehicles assembled in their economies from access to the $7,500 consumer tax credit starting on August 16.
topIn the short run, the complaints by Korea and the European Union were the same: The North American assembly criterion in Section 30D of the IRA had eliminated vehicles assembled in their economies from access to the $7,500 consumer tax credit starting on August 16
top... is enjoying the benefits of the tax credit and that this option is a likely contributor to US imports from Korea (and the European Union) continuing to grow (see below) and thus diffusing a potential trade dispute over the IRA.
topIn the short run, the complaints by Korea and the European Union were the same: The North American assembly criterion in Section 30D of the IRA had eliminated vehicles assembled in their economies from access to the $7,500 consumer tax credit starting on August 16
topFrom Korea's perspective, the main problem was the IRA's Section 30D requirement that, in order to receive the consumer tax credit, the vehicle had to be assembled in North America (table 1).
topIn the short run, the complaints by Korea and the European Union were the same: The North American assembly criterion in Section 30D of the IRA had eliminated vehicles assembled in their economies from access to the $7,500 consumer tax credit starting on August 16.
top... in the private sector is enjoying the benefits of the tax credit and that this option is a likely contributor to US imports from Korea (and the European Union) continuing to grow (see below) and thus diffusing a potential trade dispute over the IRA.
topIn the short run, the complaints by Korea and the European Union were the same: The North American assembly criterion in Section 30D of the IRA had eliminated vehicles assembled in their economies from access to the $7,500 consumer tax credit starting on August 16
top... successful at getting his counterpart, US Trade Representative (USTR) Katherine Tai, to engage frequently to attempt to resolve the issue.4 But the IRA remained an ongoing domestic political problem for the Yoon administration for months.5 The Biden administration would ultimately take actions to address Korea's most immediate economic concerns about the IRA
top... content provisions for electric vehicles (EVs), which were expected to hurt Korea's politically and economically important automakers.3 Ahn's persistence was successful at getting his counterpart, US Trade Representative (USTR) Katherine Tai, to engage frequently to attempt to resolve the issue.4 But the IRA remained an ongoing domestic political problem for the Yoon administration for months.5 The Biden administration...
topOn December 29, 2022, the Internal Revenue Service (IRS) (part of the Treasury Department) clarified that leased vehicles would also be eligible for tax credits under the IRA under a different track of the legislation, Section 45W (IRS 2022)
topOn December 29, 2022, the Internal Revenue Service (IRS) (part of the Treasury Department) clarified that leased vehicles would also be eligible for tax credits under the IRA under a different track of the legislation, Section 45W (IRS 2022).
top... US Trade Representative (USTR) Katherine Tai, to engage frequently to attempt to resolve the issue.4 But the IRA remained an ongoing domestic political problem for the Yoon administration for months.5 The Biden administration would ultimately take actions to address Korea's most immediate economic concerns about the IRA
top... Ahn's persistence was successful at getting his counterpart, US Trade Representative (USTR) Katherine Tai, to engage frequently to attempt to resolve the issue.4 But the IRA remained an ongoing domestic political problem for the Yoon administration for months.5 The Biden administration would ultimately take actions to address Korea's most immediate economic concerns about the IRA
top... complaint involved the IRA's discriminatory local content provisions for electric vehicles (EVs), which were expected to hurt Korea's politically and economically important automakers.3 Ahn's persistence was successful at getting his counterpart, US Trade Representative (USTR) Katherine Tai, to engage frequently to attempt to resolve the issue.4 But the IRA remained an ongoing domestic political problem...
top... vehicles (EVs), which were expected to hurt Korea's politically and economically important automakers.3 Ahn's persistence was successful at getting his counterpart, US Trade Representative (USTR) Katherine Tai, to engage frequently to attempt to resolve the issue.4 But the IRA remained an ongoing domestic political problem for the Yoon administration for months.5 The Biden administration would ultimately take...
topOn December 29, 2022, the Internal Revenue Service (IRS) (part of the Treasury Department) clarified that leased vehicles would also be eligible for tax credits under the IRA under a different track of the legislation, Section 45W (IRS 2022)
top... seemingly resolved.6 It explains how the law, the regulations Treasury wrote to implement the law, the trade agreements over critical minerals that the USTR is negotiating in light of the law, and the Korean government's own policy response are likely to affect Korean supply chains
topPresident Biden acknowledged the legitimacy of some of the concerns raised by Korea (and Europe) with the IRA during a joint press conference on December 1, 2022 with French president Emmanuel Macron, who had said that the IRA's subsidies risked "fragmenting the West."39 Biden admitted to problems with the legislation by stating,40 "For example, there's...
topPresident Biden acknowledged the legitimacy of some of the concerns raised by Korea (and Europe) with the IRA during a joint press conference on December 1, 2022 with French president Emmanuel Macron, who had said that the IRA's subsidies risked "fragmenting the West."39 Biden admitted...
topPresident Biden acknowledged the legitimacy of some of the concerns raised by Korea (and Europe) with the IRA during a joint press conference on December 1, 2022 with French president Emmanuel Macron, who had said that the IRA's subsidies risked "fragmenting the West."39 Biden admitted to problems with the legislation by stating,40 "For example, there's a provision in it that says...
topThe details of how the problem was solved may prove difficult for the Korean public to understand, possibly failing to address the domestic political problem the IRA caused for the Yoon administration
topDepending on the still-emerging details of how these policies are applied, they may support or undermine the incentives and goals of the EV and battery tax credits in the IRA
topThe Biden administration has actively encouraged other key economies to subsidize their clean energy industries and in early 2023, the Korean government implemented new policies, including an industrial policy for its EV plants and support for its considerable battery industry
top(Korea filed formal WTO disputes against both sets of US tariffs and was also affected by the Trump administration's policy decision to decimate the WTO's dispute settlement system by refusing to appoint new members to its Appellate Body.15) Korean steel companies had to accept tight, binding...
top(Korea filed formal WTO disputes against both sets of US tariffs and was also affected by the Trump administration's policy decision to decimate the WTO's dispute settlement system by refusing to appoint new members to its Appellate Body.15) Korean steel companies...
top... raised the possibility of a potential dispute before the WTO but only "as a last resort." (In the past, such disputes had the potential for a country like Korea to impose WTO-authorized retaliatory tariffs against US exports.32).
top... Trade, Industry, and Energy (MOTIE), raised the possibility of a potential dispute before the WTO but only "as a last resort." (In the past, such disputes had the potential for a country like Korea to impose WTO-authorized retaliatory tariffs against US exports.32).
top... administration's policy decision to decimate the WTO's dispute settlement system by refusing to appoint new members to its Appellate Body.15) Korean steel companies had to accept tight, binding volume limits on how much they could export in order to avoid Trump's national security tariffs of 25 percent.16 Finally, like automakers in Japan, Europe, Canada, and Mexico, Korean car companies also...
top... and Germany had similar concerns on behalf of their automakers, Korean officials announced that they would consult with the European Union and consider a joint response.31 Lee Chang-yang, Minister of Trade, Industry, and Energy (MOTIE), raised the possibility of a potential dispute before the WTO but only "as a last resort." (In the past, such disputes had the potential for a country like Korea to impose...
top... percent.16 Finally, like automakers in Japan, Europe, Canada, and Mexico, Korean car companies also lived under constant concern that Trump would follow through with his threats to impose a 25 percent tariff on their auto exports.17
top(Korea filed formal WTO disputes against both sets of US tariffs and was also affected by the Trump administration's policy decision to decimate the WTO's dispute settlement system by refusing to appoint new members to its Appellate Body.15) Korean steel companies had to accept tight, binding volume limits on how much they could export in order to avoid Trump's national...
top... system by refusing to appoint new members to its Appellate Body.15) Korean steel companies had to accept tight, binding volume limits on how much they could export in order to avoid Trump's national security tariffs of 25 percent.16 Finally, like automakers in Japan, Europe, Canada, and Mexico, Korean car companies also lived under constant concern that Trump would follow through with his threats to impose...
top... (MOTIE), raised the possibility of a potential dispute before the WTO but only "as a last resort." (In the past, such disputes had the potential for a country like Korea to impose WTO-authorized retaliatory tariffs against US exports.32).
top(Korea filed formal WTO disputes against both sets of US tariffs and was also affected by the Trump administration's policy decision to decimate the WTO's dispute settlement system by refusing to appoint new members...
topKorea would become a critical player in controlling exports of semiconductors, as pushed by the United States and other allies, both to address concerns over China's "military-civil fusion" policy and to respond to Russia's invasion of Ukraine
topKorea would become a critical player in controlling exports of semiconductors, as pushed by the United States and other allies, both to address concerns over China's "military-civil fusion" policy and to respond to Russia's invasion of Ukraine
top... exports of semiconductors, as pushed by the United States and other allies, both to address concerns over China's "military-civil fusion" policy and to respond to Russia's invasion of Ukraine.
top. Outside of trade, Korea faced a trying time as a US military ally. Trump frequently chided the Korean government for not contributing more to the costs of US military defense, and the Korean press reported that his administration was considering withdrawing up to 4,000 of...
topIn one of her first official actions after being sworn in as USTR, Katherine Tai brokered a negotiated solution between LG Energy Solution and SK Innovation, resolving a bitter intellectual property rights dispute between the two major Korean companies that were seeking to make batteries...
topIn one of her first official actions after being sworn in as USTR, Katherine Tai brokered a negotiated solution between LG Energy Solution and SK Innovation, resolving a bitter intellectual property rights dispute between the two major Korean companies that were seeking to make batteries for EVs in the US market (more on the overlooked importance of this...
topIn one of her first official actions after being sworn in as USTR, Katherine Tai brokered a negotiated solution between LG Energy Solution and SK Innovation, resolving a bitter intellectual property rights dispute between the two major Korean companies that were seeking to make batteries for EVs in the US market (more on the overlooked importance of this deal is below).20
topIn one of her first official actions after being sworn in as USTR, Katherine Tai brokered a negotiated solution between LG Energy Solution and SK Innovation, resolving a bitter intellectual property rights dispute between the two major Korean companies that were seeking to make batteries for EVs in the US market (more on the overlooked...
topHowever, it still applies its most favored nation tariff rate of 8 percent on EV imports from China and Japan, providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major foreign competitors
topHowever, it still applies its most favored nation tariff rate of 8 percent on EV imports from China and Japan, providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major...
topFirst, MOTIE announced that the ExportImport Bank of Korea and the Korea Trade Insurance would extend up to $5.3 billion of loans and guarantees to help Korean companies struggling to meet the sourcing requirements...
topFirst, MOTIE announced that the ExportImport Bank of Korea and the Korea Trade Insurance would extend up to $5.3 billion of loans and guarantees to help Korean companies struggling to meet the sourcing requirements of the IRA, so that they would remain eligible for the Section 30D tax credits.73...
topHowever, it still applies its most favored nation tariff rate of 8 percent on EV imports from China and Japan, providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major foreign competitors
top... explains how the law, the regulations Treasury wrote to implement the law, the trade agreements over critical minerals that the USTR is negotiating in light of the law, and the Korean government's own policy response are likely to affect Korean supply chains.
top(Korea filed formal WTO disputes against both sets of US tariffs and was also affected by the Trump administration's policy decision to decimate the WTO's dispute settlement system by refusing to appoint new members to its Appellate Body.15) Korean steel companies had to accept tight, binding volume limits on how much...
top... companies also lived under constant concern that Trump would follow through with his threats to impose a 25 percent tariff on their auto exports.17. . Outside of trade, Korea faced a trying time as a US military ally. Trump frequently chided the Korean government for not contributing more to the costs of US military defense, and the Korean press reported that his administration was considering withdrawing up...
top... chided the Korean government for not contributing more to the costs of US military defense, and the Korean press reported that his administration was considering withdrawing up to 4,000 of the 28,500 troops stationed on the peninsula.18 Politically, Korea was in a no win situation.
topTwo months later, South Korea was the site of Biden's first international trip outside of Europe as president - ahead of Japan, Germany, and even Canada
topTwo months later, South Korea was the site of Biden's first international trip outside of Europe as president - ahead of Japan, Germany, and even Canada. Biden visited Samsung's Pyeongtaek campus, highlighting the importance of the Korean semiconductor industry for US strategy
topRecognizing that Sweden and Germany had similar concerns on behalf of their automakers, Korean officials announced that they would consult with the European Union and consider a joint response.31 Lee Chang-yang, Minister of Trade, Industry, and Energy (MOTIE), raised the possibility of a potential dispute before the WTO but only "as a last resort." (In...
topHowever, it still applies its most favored nation tariff rate of 8 percent on EV imports from China and Japan, providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major foreign competitors.
top... appease a president who had famously threatened to rip it up.13 Korea was one of the countries with a chronic trade surplus with the United States; ending those bilateral surpluses was one guiding trade policy principle for the president and his trade team.
top... renegotiate elements of the Korea-US Free Trade Agreement (KORUS) to appease a president who had famously threatened to rip it up.13 Korea was one of the countries with a chronic trade surplus with the United States; ending those bilateral surpluses was one guiding trade policy principle for the president and his trade team
top... that they would consult with the European Union and consider a joint response.31 Lee Chang-yang, Minister of Trade, Industry, and Energy (MOTIE), raised the possibility of a potential dispute before the WTO but only "as a last resort." (In the past, such disputes had the potential for a country like Korea to impose WTO-authorized retaliatory tariffs against US exports.32)
top. Third, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement)
topThird, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement).
top. Third, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement)
topThird, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement)
topYet, even if temporary, the leasing accommodation may be sufficient for a company like Hyundai, whose main concern is maintaining access to US tax credits for exports from its Ulsan plant in Korea until its new EV plant in Georgia is operational in 2025.. . How the Biden administration resolved this trade friction with Korea and the European Union is noteworthy
topThird, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement)
topRecognizing that Sweden and Germany had similar concerns on behalf of their automakers, Korean officials announced that they would consult with the European Union and consider a joint response.31 Lee Chang-yang, Minister of Trade, Industry, and Energy (MOTIE), raised the possibility of a potential dispute before the WTO but only "as a last resort." (In the past, such disputes had the potential for a country like...
topThird, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement).
topRecognizing that Sweden and Germany had similar concerns on behalf of their automakers, Korean officials announced that they would consult with the European Union and consider a joint response.31 Lee Chang-yang, Minister of Trade, Industry, and Energy (MOTIE), raised the possibility of a potential...
top... after Trump was inaugurated, it was forced to renegotiate elements of the Korea-US Free Trade Agreement (KORUS) to appease a president who had famously threatened to rip it up.13 Korea was one of the countries with a chronic trade surplus with the United States; ending those bilateral surpluses was one guiding trade policy principle for the president and his trade team
topOn March 31, 2023, Treasury announced another criterion for the sourcing requirements for components and critical minerals and how countries could become "free trade agreement" partners for the sake of gaining access to Section 30D tax credits.45 Korea was already one of 20 countries with which the United States has a Congressionally...
topAlmost immediately after Trump was inaugurated, it was forced to renegotiate elements of the Korea-US Free Trade Agreement (KORUS) to appease a president who had famously threatened to rip it up.13 Korea was one of the countries with a chronic trade surplus with the United States; ending those bilateral surpluses was one guiding trade policy principle for the president and his trade team
topThird, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement).
topAlmost immediately after Trump was inaugurated, it was forced to renegotiate elements of the Korea-US Free Trade Agreement (KORUS) to appease a president who had famously threatened to rip it up.13 Korea was one of the countries with a chronic trade surplus with the United States; ending those bilateral surpluses was one...
topAlmost immediately after Trump was inaugurated, it was forced to renegotiate elements of the Korea-US Free Trade Agreement (KORUS) to appease a president who had famously threatened to rip it up.13 Korea was one of the countries with a chronic trade...
topAlmost immediately after Trump was inaugurated, it was forced to renegotiate elements of the Korea-US Free Trade Agreement (KORUS) to appease a president who had famously threatened to rip it up.13 Korea was one of the countries with...
topResolution did not involve Korea filing a formal WTO dispute challenging the US local content provisions for the consumer tax credits.75 Although a smaller economy like Korea may, in general terms, miss losing access to the WTO dispute settlement to confront...
top. Third, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement)
top... filing a formal WTO dispute challenging the US local content provisions for the consumer tax credits.75 Although a smaller economy like Korea may, in general terms, miss losing access to the WTO dispute settlement to confront US policy, at least in this instance, Korea's short-term interests may have been taken care of without litigation
topKorea's policy response and its electric vehicle trade with the. Rest of the world. This section explores Korea's evolving policies toward the EV supply chain, including how they have changed in response to the IRA and subsequent engagement with US policymakers
topUltimately, Europe did so as well, and its complaints may have ultimately been the driving force behind the Biden administration's policy response
top. The Biden administration's policy response to complaints from Korea and. Europe. President Biden acknowledged the legitimacy of some of the concerns raised by Korea (and Europe) with the IRA during a joint press conference on December 1, 2022 with French president Emmanuel Macron,...
topThe consumer tax credits in the law did appear to discriminate against US imports of EVs, including popular models manufactured in Korea.
top... and Senate Majority Leader Chuck Schumer also included new terms on consumer tax credits for EVs that seemed to exclude eligibility for EVs manufactured in Korea, including all of those award-winning models.
topThe consumer tax credits in the law did appear to discriminate against US imports of EVs, including popular models manufactured in Korea.
topHowever, the last-minute deal struck between Senator Joe Manchin and Senate Majority Leader Chuck Schumer also included new terms on consumer tax credits for EVs that seemed to exclude eligibility for EVs manufactured in Korea, including all of those award-winning models.
topThe impact and evolution of climate-oriented policies in a trading system that is less rules-based will be important to monitor and evaluate. Korea has already adjusted its own consumer tax credits for EVs
topEarly evidence suggests that the US approach may have fixed Korea's main short-term worries. . . The consumer tax credits in the law did appear to discriminate against US imports of EVs, including popular models manufactured in Korea
topHowever, the last-minute deal struck between Senator Joe Manchin and Senate Majority Leader Chuck Schumer also included new terms on consumer tax credits for EVs that seemed to exclude eligibility for EVs manufactured in Korea, including all of those award-winning...
topHowever, the last-minute deal struck between Senator Joe Manchin and Senate Majority Leader Chuck Schumer also included new terms on consumer tax credits for EVs that seemed to exclude eligibility for EVs manufactured in Korea, including all of those award-winning models
topThe impact and evolution of climate-oriented policies in a trading system that is less rules-based will be important to monitor and evaluate. Korea has already adjusted its own consumer tax credits for EVs
topIn volume terms, Korea trailed only China and the European Union (panel b).. . EVs are making up an increasing share of automobile exports in Korea.
topIn the 12 months ending in May 2023, US imports of EVs from Korea increased to $3.2 billion. (US imports from both Korea and the European Union more than doubled relative to the preceding 12-month period.).
topAn important part of the clean energy transition is to convince consumers in both the United States and Korea to switch from internal combustion engine (ICE) vehicles to EVs. Take-up in each country was initially slow (figure 1)
topTreasury's December 29 leasing announcement partly explains why US imports of EVs from Korea continued in the nine months after the IRA went into effect in August 2022 (figure 5).
topAn important part of the clean energy transition is to convince consumers in both the United States and Korea to switch from internal combustion engine (ICE) vehicles to EVs
top... joint-venture factory will be located in Bartow County, which is close to both Hyundai's existing and planned EV factories in Georgia.67) If transportation costs rise - as expected, as part of the clean energy transition - over the long run there may be relatively less long-distance international trade in finished batteries and EVs than engines and assembled vehicles during the ICE era.
topAn important part of the clean energy transition is to convince consumers in both the United States and Korea to switch from internal combustion engine (ICE) vehicles to EVs
topYet, the Treasury Department's implementing regulations have accommodated continued growth of Korean exports of EVs to the United States in the nine months since the IRA went into effect. Evidence on increasing EV leasing rates for Korean companies is supportive of the interpretation that Treasury's actions helped address Korea's...
topIn the short run, the complaints by Korea and the European Union were the same: The North American assembly criterion in Section 30D of the IRA had eliminated vehicles assembled in their economies from access to the $7,500 consumer tax credit starting on August 16
topOn December 29, 2022, the Internal Revenue Service (IRS) (part of the Treasury Department) clarified that leased vehicles would also be eligible for tax credits under the IRA under a different track of the legislation, Section 45W (IRS 2022).
topThat began to change for Korea in 2021, partly as a result of a 2019 amendment to its Clean Air Conservation Act that enabled the Ministry of Environment to set annual supply targets for low and zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major automaking countries,...
top... set annual supply targets for low and zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major automaking countries, including Japan.
topThat began to change for Korea in 2021, partly as a result of a 2019 amendment to its Clean Air Conservation Act that enabled the Ministry of Environment to set annual supply targets for low and zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major...
topThat began to change for Korea in 2021, partly as a result of a 2019 amendment to its Clean Air Conservation Act that enabled the Ministry of Environment to set annual supply targets for low and zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun...
top... 2019 amendment to its Clean Air Conservation Act that enabled the Ministry of Environment to set annual supply targets for low and zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major automaking countries, including Japan
top... vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major automaking countries, including Japan.
top... enabled the Ministry of Environment to set annual supply targets for low and zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major automaking countries, including Japan
topHowever, it still applies its most favored nation tariff rate of 8 percent on EV imports from China and Japan, providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major foreign competitors
topThird, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement)
top... began to change for Korea in 2021, partly as a result of a 2019 amendment to its Clean Air Conservation Act that enabled the Ministry of Environment to set annual supply targets for low and zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major automaking countries, including Japan
top... applies its most favored nation tariff rate of 8 percent on EV imports from China and Japan, providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major foreign competitors.
top... Korea and the European Union were the same: The North American assembly criterion in Section 30D of the IRA had eliminated vehicles assembled in their economies from access to the $7,500 consumer tax credit starting on August 16.
topThe main insight from figure 4 is supportive evidence that some entity in the private sector is enjoying the benefits of the tax credit and that this option is a likely contributor to US imports from Korea (and the European Union) continuing to grow (see below) and thus diffusing a potential trade dispute over the IRA
topCarbon dioxide emissions and the switch to electric vehicles. To cut their overall carbon dioxide (CO2) emissions, both the United States and Korea would need to cut tailpipe emissions
topHowever, it still applies its most favored nation tariff rate of 8 percent on EV imports from China and Japan, providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major foreign competitors.
top... the uncapped nature of the tax credits for several clean energy products led to estimates of the fiscal cost of the IRA that exceed the original CBO score of over $350 billion (Bistline, Mehrotra, and Wolfram 2023; Penn-Wharton Budget Model 2023).
topAn important part of the clean energy transition is to convince consumers in both the United States and Korea to switch from internal combustion engine (ICE) vehicles to EVs.
topFor example, the uncapped nature of the tax credits for several clean energy products led to estimates of the fiscal cost of the IRA that exceed the original CBO score of over $350 billion (Bistline, Mehrotra, and Wolfram 2023;...
top... nature of the tax credits for several clean energy products led to estimates of the fiscal cost of the IRA that exceed the original CBO score of over $350 billion (Bistline, Mehrotra, and Wolfram 2023; Penn-Wharton Budget Model 2023).
topFor example, the uncapped nature of the tax credits for several clean energy products led to estimates of the fiscal cost of the IRA that exceed the original CBO score of over $350 billion (Bistline, Mehrotra, and Wolfram 2023; Penn-Wharton Budget Model 2023).
topFor example, the uncapped nature of the tax credits for several clean energy products led to estimates of the fiscal cost of the IRA that exceed the original CBO score of over $350 billion (Bistline, Mehrotra, and Wolfram 2023; Penn-Wharton Budget Model 2023)
topFor example, the uncapped nature of the tax credits for several clean energy products led to estimates of the fiscal cost of the IRA that exceed the original CBO score of over $350 billion (Bistline, Mehrotra, and Wolfram 2023; Penn-Wharton Budget Model 2023)
topFor example, the uncapped nature of the tax credits for several clean energy products led to estimates of the fiscal cost of the IRA that exceed the original CBO score of over $350 billion (Bistline, Mehrotra, and Wolfram 2023; Penn-Wharton Budget Model 2023)
topOf that, personal vehicles accounted for 58 percent and commercial trucks and buses for 25 percent. In Korea, transportation made up 17 percent of emissions in 2021, of which 97 percent was road transport.8 Reducing emissions in the transportation sector was thus a key mitigation strategy for both countries in their Nationally Determined Contributions submitted...
topHowever, it still applies its most favored nation tariff rate of 8 percent on EV imports from China and Japan, providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major foreign competitors
top... the uncapped nature of the tax credits for several clean energy products led to estimates of the fiscal cost of the IRA that exceed the original CBO score of over $350 billion (Bistline, Mehrotra, and Wolfram 2023; Penn-Wharton Budget Model 2023).. . Effect on imports of electric vehicles from Korea
top... and planned EV factories in Georgia.67) If transportation costs rise - as expected, as part of the clean energy transition - over the long run there may be relatively less long-distance international trade in finished batteries and EVs than engines and assembled vehicles during the ICE era.. . Korea's policy response and its electric vehicle trade with the
topIt then presents data on Korea's EV trade with the world.. . Korea's demand-side and supply-side policies for electric vehicles.
topThis change made vehicles assembled in Korea - and elsewhere outside North America - eligible for tax credits, as Section 45W did not contain the limiting criterion found in Section 30D (see table 1).
topHowever, it still applies its most favored nation tariff rate of 8 percent on EV imports from China and Japan, providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major foreign competitors.
topKorea would become a critical player in controlling exports of semiconductors, as pushed by the United States and other allies, both to address concerns over China's "military-civil fusion" policy and to respond to Russia's invasion of Ukraine.
topOnly 10 EV models were eligible for consumer tax credits in December 2022.58 With few models eligible during September-December, US consumers had so little choice that imports from Korea or Europe were not at a sizeable disadvantage
topHowever, the last-minute deal struck between Senator Joe Manchin and Senate Majority Leader Chuck Schumer also included new terms on consumer tax credits for EVs that seemed to exclude eligibility for EVs manufactured in Korea,...
topOnly 10 EV models were eligible for consumer tax credits in December 2022.58 With few models eligible during September-December, US consumers had so little choice that imports from Korea or Europe were not at a sizeable disadvantage.
topOnly 10 EV models were eligible for consumer tax credits in December 2022.58 With few models eligible during September-December, US consumers had so little choice that imports from Korea or Europe were not at a sizeable disadvantage
top... Senator Joe Manchin and Senate Majority Leader Chuck Schumer also included new terms on consumer tax credits for EVs that seemed to exclude eligibility for EVs manufactured in Korea, including all of those award-winning models.
top... the consumer tax credits.75 Although a smaller economy like Korea may, in general terms, miss losing access to the WTO dispute settlement to confront US policy, at least in this instance, Korea's short-term interests may have been taken care of without litigation.
top... challenging the US local content provisions for the consumer tax credits.75 Although a smaller economy like Korea may, in general terms, miss losing access to the WTO dispute settlement to confront US policy, at least in this instance, Korea's short-term interests may have been taken care of without litigation
topConclusion. The consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government.
top... Furthermore, the government's response to the IRA was to increase subsidies for Korean EV plants locally - its own form of industrial policy - and to provide lending and other financial guarantees to help Korean battery companies seeking to retain access to the US tax credits in the IRA that require them to take substantial investments to orient their supply chains outside of China
topFrom Korea's perspective, the main problem was the IRA's Section 30D requirement that, in order to receive the consumer tax credit, the vehicle had to be assembled in North America (table 1).
topResolution occurred much more quickly than a formal World Trade Organization (WTO) dispute would have - if such a mechanism could have fixed the problem at all
top... administration entered office, it sought to repair ties with Korea as well as numerous other allies that had suffered under the Trump administration. In one of her first official actions after being sworn in as USTR, Katherine Tai brokered a negotiated solution between LG Energy Solution and SK Innovation, resolving a bitter intellectual property rights dispute between the two major Korean companies that were seeking to make batteries...
topFirst, MOTIE announced that the ExportImport Bank of Korea and the Korea Trade Insurance would extend up to $5.3 billion of loans and guarantees to help Korean companies struggling to meet the sourcing requirements of the IRA, so that they would remain eligible for the Section 30D tax credits.73 Exactly how was not disclosed; it could involve helping input...
top... Clean Air Conservation Act that enabled the Ministry of Environment to set annual supply targets for low and zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major automaking countries, including Japan
top... announced that the ExportImport Bank of Korea and the Korea Trade Insurance would extend up to $5.3 billion of loans and guarantees to help Korean companies struggling to meet the sourcing requirements of the IRA, so that they would remain eligible for the Section 30D tax credits.73 Exactly how was not disclosed; it could involve helping input suppliers to battery companies deepen their ties with source countries...
topIt did so by writing implementing regulations that were friendly to a number of major US allies, especially Korea and NATO-allied countries in the European Union (table 2).. . On December 29, 2022, the Internal Revenue Service (IRS) (part of the Treasury Department) clarified that leased vehicles would also be eligible for tax credits under the IRA under a different...
top... that were friendly to a number of major US allies, especially Korea and NATO-allied countries in the European Union (table 2).. . On December 29, 2022, the Internal Revenue Service (IRS) (part of the Treasury Department) clarified that leased vehicles would also be eligible for tax credits under the IRA under a different track of the legislation, Section 45W (IRS 2022)
topThanks in part to the Treasury Department's regulations written to implement the law, Korean exports of EVs to the United States grew even after the IRA went into force.
topYet, the Treasury Department's implementing regulations have accommodated continued growth of Korean exports of EVs to the United States in the nine months since the IRA went into effect.
topThe consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government. The Treasury Department implementing regulations may have appeased key interests in Korea and other important US allies, such as the European Union, that manufacture...
topBecause resolution of the fight over EVs did not involve changing the law or winning a WTO dispute, trumpeting it as a win to the Korean public may prove difficult, however. Whether the resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear.
topBecause resolution of the fight over EVs did not involve changing the law or winning a WTO dispute, trumpeting it as a win to the Korean public may prove difficult, however. Whether the resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear
topBecause resolution of the fight over EVs did not involve changing the law or winning a WTO dispute, trumpeting it as a win to the Korean public may prove difficult, however. Whether the resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear
topBecause resolution of the fight over EVs did not involve changing the law or winning a WTO dispute, trumpeting it as a win to the Korean public may prove difficult, however. Whether the resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear
top... South Korean National Assembly passed a resolution voicing concerns that the new US tax credits in the law discriminated against Korean companies.1 Some Korean officials went so far as to call the IRA an act of betrayal.2 The Yoon Suk Yeol administration was suddenly under severe political pressure to do something about the new US law
topAlmost immediately after the Inflation Reduction Act (IRA) went into effect, in August 2022, a standing committee in the South Korean National Assembly passed a resolution voicing concerns that the new US tax credits in the law discriminated against Korean companies.1 Some Korean officials went so far as to call the IRA an act of betrayal.2 The Yoon Suk Yeol...
top... effect, in August 2022, a standing committee in the South Korean National Assembly passed a resolution voicing concerns that the new US tax credits in the law discriminated against Korean companies.1 Some Korean officials went so far as to call the IRA an act of betrayal.2 The Yoon Suk Yeol administration was suddenly under severe political pressure to do something about the new US law
topThe paper also examines the potential impact of the law on South Korean battery companies, and it provides an initial exploration into how the Korean government responded to the IRA by adjusting its own policy mix of EV consumer tax credits and industrial policy for its...
top... examines the potential impact of the law on South Korean battery companies, and it provides an initial exploration into how the Korean government responded to the IRA by adjusting its own policy mix of EV consumer tax credits and industrial policy for its EV plants and battery makers.
topIn March 2023, the Korean government established penetration rate targets for low-emissions vehicles at 26 percent by 2025, with a 22 percent penetration rate for zero-emissions vehicles like EVs.11
topKorea's demand-side and supply-side policies for electric vehicles. Like the United States, Korea offers consumer tax credits for EVs. The Korean government publishes a list that documents the subsidy amount received by each eligible EV model.68 As of June 2023, the...
topIn March 2023, the Korean government established penetration rate targets for low-emissions vehicles at 26 percent by 2025, with a 22 percent penetration rate for zero-emissions vehicles like EVs.11.
topThanks in part to the Treasury Department's regulations written to implement the law, Korean exports of EVs to the United States grew even after the IRA went into force
topIn March 2023, the Korean government established penetration rate targets for low-emissions vehicles at 26 percent by 2025, with a 22 percent penetration rate for zero-emissions vehicles like EVs.11
topThe Korean government publishes a list that documents the subsidy amount received by each eligible EV model.68 As of June 2023, the list included models from both domestic automakers like Hyundai and Kia, as well as foreign companies like BMW, GM, Stellantis, Tesla, Smart, Polestar, Volvo, and Volkswagen
topThe Korean government publishes a list that documents the subsidy amount received by each eligible EV model.68 As of June 2023, the list included models from both domestic automakers like Hyundai and Kia, as well as foreign companies like BMW, GM, Stellantis, Tesla, Smart, Polestar, Volvo, and Volkswagen
topKorean imports of EVs from the United States rose to around $1 billion per year in mid-2021 and have not increased much since (they fell for a period in mid-2022), as figure 7 shows.
topKorean imports of EVs from the United States rose to around $1 billion per year in mid-2021 and have not increased much since (they fell for a period in mid-2022), as figure 7 shows.
topKorean companies quickly established joint ventures or made other arrangements with a number of automakers manufacturing EVs across the United States to provide them with batteries (table 3).
topIn March 2023, the Korean government established penetration rate targets for low-emissions vehicles at 26 percent by 2025, with a 22 percent penetration rate for zero-emissions vehicles like EVs.11
topThat began to change for Korea in 2021, partly as a result of a 2019 amendment to its Clean Air Conservation Act that enabled the Ministry of Environment to set annual supply targets for low and zero-emissions vehicles.10 Although EV...
top... zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major automaking countries, including Japan.
top... inaugurated, it was forced to renegotiate elements of the Korea-US Free Trade Agreement (KORUS) to appease a president who had famously threatened to rip it up.13 Korea was one of the countries with a chronic trade surplus with the United States; ending those bilateral surpluses was one guiding trade policy principle for the president and his trade team
topBeginning in early 2018, Korean exports were caught up in a series of controversial Trump tariff actions.14 The import tariffs on washing machines mainly targeted Samsung and LG, Korean companies exporting to the United States from plants all over the world
top... European Union and China, it has begun to outpace the United States and other major automaking countries, including Japan. In March 2023, the Korean government established penetration rate targets for low-emissions vehicles at 26 percent by 2025, with a 22 percent penetration rate for zero-emissions vehicles like EVs.11
topThis paper first shows how the Biden administration addressed Korea's concerns about the law's effect on its sales of electric vehicles (EVs) in the United States
topThis paper first shows how the Biden administration addressed Korea's concerns about the law's effect on its sales of electric vehicles (EVs) in the United States. Thanks in part to the Treasury Department's regulations written to implement the law, Korean exports of EVs to the United States grew even after the IRA went into force
topBeginning in early 2018, Korean exports were caught up in a series of controversial Trump tariff actions.14 The import tariffs on washing machines mainly targeted Samsung and LG, Korean companies exporting to the United States from plants all over the world
topIn volume terms, Korea trailed only China and the European Union (panel b).. . EVs are making up an increasing share of automobile exports in Korea. By volume, 9 percent of Korean vehicle exports were electric in 2022, roughly the same share as the European Union...
topThe Korean government publishes a list that documents the subsidy amount received by each eligible EV model.68 As of June 2023, the list included models from both domestic automakers like Hyundai and Kia, as well as foreign companies like BMW, GM, Stellantis, Tesla, Smart, Polestar, Volvo, and Volkswagen
top... that documents the subsidy amount received by each eligible EV model.68 As of June 2023, the list included models from both domestic automakers like Hyundai and Kia, as well as foreign companies like BMW, GM, Stellantis, Tesla, Smart, Polestar, Volvo, and Volkswagen.
topYet, the Treasury Department's implementing regulations have accommodated continued growth of Korean exports of EVs to the United States in the nine months since the IRA went into effect.
topThe consumer tax credits in the law did appear to discriminate against US imports of EVs, including popular models manufactured in Korea. Yet, the Treasury Department's implementing regulations have accommodated continued growth of Korean exports of EVs to the United States in the nine months since the IRA went...
topThe consumer tax credits in the law did appear to discriminate against US imports of EVs, including popular models manufactured in Korea. Yet, the Treasury Department's implementing regulations have accommodated continued growth of Korean exports of EVs to the United States in the nine months since the IRA went into effect
top... in the law did appear to discriminate against US imports of EVs, including popular models manufactured in Korea. Yet, the Treasury Department's implementing regulations have accommodated continued growth of Korean exports of EVs to the United States in the nine months since the IRA went into effect
topThe consumer tax credits in the law did appear to discriminate against US imports of EVs, including popular models manufactured in Korea. Yet, the Treasury Department's implementing regulations have accommodated continued growth of Korean exports of EVs to the...
top... assembling EVs outside of North America so that they would retain eligibility for the tax credit until the plant came online in 2025.34 That proposed legislation never came seriously close to passage, and any political window of opportunity closed when the Republican Party regained control of the House of Representatives in the November 2022 midterm elections
topAt over 35 percent, China's EV share of its total vehicle exports far outpaced the historical automakers, as the newest entrant into the auto industry technologically leapfrogged ICE vehicles.
top... the IRA, so that they would remain eligible for the Section 30D tax credits.73 Exactly how was not disclosed; it could involve helping input suppliers to battery companies deepen their ties with source countries outside of China.
topBeginning in early 2018, Korean exports were caught up in a series of controversial Trump tariff actions.14 The import tariffs on washing machines mainly targeted Samsung and LG, Korean companies exporting to the United States from plants all over the world
top... early 2018, Korean exports were caught up in a series of controversial Trump tariff actions.14 The import tariffs on washing machines mainly targeted Samsung and LG, Korean companies exporting to the United States from plants all over the world.
top. Beginning in early 2018, Korean exports were caught up in a series of controversial Trump tariff actions.14 The import tariffs on washing machines mainly targeted Samsung and LG, Korean companies exporting to the United States from plants all over the world
topBeginning in early 2018, Korean exports were caught up in a series of controversial Trump tariff actions.14 The import tariffs on washing machines mainly targeted Samsung and LG, Korean companies exporting to the United States from plants all over the world.
top... had to accept tight, binding volume limits on how much they could export in order to avoid Trump's national security tariffs of 25 percent.16 Finally, like automakers in Japan, Europe, Canada, and Mexico, Korean car companies also lived under constant concern that Trump would follow through with his threats to impose a 25 percent tariff on their auto exports.17
top... inaugurated, it was forced to renegotiate elements of the Korea-US Free Trade Agreement (KORUS) to appease a president who had famously threatened to rip it up.13 Korea was one of the countries with a chronic trade surplus with the United States; ending those bilateral surpluses was one guiding trade policy principle for the president and his trade team.
top... ending those bilateral surpluses was one guiding trade policy principle for the president and his trade team.. . Beginning in early 2018, Korean exports were caught up in a series of controversial Trump tariff actions.14 The import tariffs on washing machines mainly targeted Samsung and LG, Korean companies exporting to the United States from plants all over the world
topBecause the resolution did not involve reforming the statute or Korea winning a WTO dispute, however, there was no headline moment. The details of how the problem was solved may prove difficult for the Korean public to understand, possibly failing to address the domestic political problem the IRA caused for the Yoon administration
top... did not involve changing the law or winning a WTO dispute, trumpeting it as a win to the Korean public may prove difficult, however. Whether the resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear.
top. Outside of trade, Korea faced a trying time as a US military ally. Trump frequently chided the Korean government for not contributing more to the costs of US military defense, and the Korean press reported that his administration...
top. Outside of trade, Korea faced a trying time as a US military ally. Trump frequently chided the Korean government for not contributing more to the costs of US military defense, and the Korean press reported that his administration was considering withdrawing up...
top... Trade, Industry, and Energy (MOTIE), raised the possibility of a potential dispute before the WTO but only "as a last resort." (In the past, such disputes had the potential for a country like Korea to impose WTO-authorized retaliatory tariffs against US exports.32)
topConclusion. The consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government. The Treasury Department implementing regulations may have appeased key interests in Korea and other important US allies, such as the European Union, that manufacture and export EVs
top... the Inflation Reduction Act (IRA) went into effect, in August 2022, a standing committee in the South Korean National Assembly passed a resolution voicing concerns that the new US tax credits in the law discriminated against Korean companies.1 Some Korean officials went so far as to call the IRA an act of betrayal.2 The Yoon Suk Yeol administration was suddenly under severe political pressure to do something about...
top"Then when this new law was enacted and signed by President Biden and [it became clear that] that company was being discriminated against, this situation provoked emotional and political repercussions.". . The Korean government considered its options
topThis paper first shows how the Biden administration addressed Korea's concerns about the law's effect on its sales of electric vehicles (EVs) in the United States.
top... providing exporters from both the United States and the European Union a substantial tariff preference into the Korean market relative to other major foreign competitors.. . Korea's imports and exports of electric vehicles.
topAt over 35 percent, China's EV share of its total vehicle exports far outpaced the historical automakers, as the newest entrant into the auto industry technologically leapfrogged ICE vehicles.
topSecond, very few EV models were available for consumer tax credits at all during September-December 2022. Before the IRA, companies were subject to a cumulative 200,000-unit limit on the number of vehicles federal credits could apply to before having their...
top... LG Energy Solution, Samsung SDI, and SK On, as well as Hyundai and Kia, the latter of which followed up with written comments.37 When he got wind of some of the proposals, Senator Manchin was not pleased and sent his own letter to Treasury Secretary Yellen.38 "Unfortunately," the letter read, "I have heard that some automakers and foreign governments are asking your agency for a broad interpretation of [Section] 45W that would allow rental cars,...
topA November 2022 Treasury roundtable included input from battery companies LG Energy Solution, Samsung SDI, and SK On, as well as Hyundai and Kia, the latter of which followed up with written comments.37 When he got wind of some of the proposals, Senator Manchin was not pleased and sent his own letter to Treasury Secretary Yellen.38...
topFor the US export market, they proceeded much later and increased quite rapidly. . . Conclusion. The consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government
topFor the US export market, they proceeded much later and increased quite rapidly. . . Conclusion. The consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government. The Treasury Department implementing regulations may have appeased key interests in Korea and other important US allies, such as the European Union, that manufacture...
top... potential to gain tremendously from the increased take-up of EVs in the US market and the tax credits available in the IRA through at least two channels.. . First, Korean companies dominated the handful of EV models eligible for the Section 30D tax credits once the sourcing limitations went into effect April 18, 2023
topIn May 2023, Korea's Ministry of Economy and Finance expanded the scope of investment tax credits to cover EV technologies and EV plants, after the National Assembly passed a law in March supporting the country's key industrial sectors.71 (These technologies were added to Korea's list of "national strategic technology"...
top... (These technologies were added to Korea's list of "national strategic technology" that would benefit from government support.) Hyundai and Kia were expected to gain from expanded access to the Korean government's investment tax credit increase to 25 percent for their EV plants.72.
top... an expansion of its own industrial policy for various segments of the EV supply chain, partly in response to the IRA.. . In May 2023, Korea's Ministry of Economy and Finance expanded the scope of investment tax credits to cover EV technologies and EV plants, after the National Assembly passed a law in March supporting the country's key industrial sectors.71 (These technologies were added to Korea's...
topLG Energy Solution's plant in Michigan and its Ultium Cells Ohio Factory were producing already in 2023.62 (In its 2023 first quarter earnings release, LG Energy Solution projects that it will receive about $76 million in IRA tax credits, making up 16 percent of its operating profits.63) SK On, which produces batteries at its site in Georgia,...
topKorea also announced an expansion of its own industrial policy for various segments of the EV supply chain, partly in response to the IRA.. . In May 2023, Korea's Ministry of Economy and Finance expanded the scope of investment tax credits to cover EV technologies and EV...
topLG Energy Solution's plant in Michigan and its Ultium Cells Ohio Factory were producing already in 2023.62 (In its 2023 first quarter earnings release, LG Energy Solution projects that it will receive about $76 million in IRA tax credits, making up 16 percent of its operating...
topThe details of how the problem was solved may prove difficult for the Korean public to understand, possibly failing to address the domestic political problem the IRA caused for the Yoon administration. . . The IRA has also triggered additional domestic policy reactions in Korea.
top... technologies and EV plants, after the National Assembly passed a law in March supporting the country's key industrial sectors.71 (These technologies were added to Korea's list of "national strategic technology" that would benefit from government support.) Hyundai and Kia were expected to gain from expanded access to the Korean government's investment tax credit increase to 25 percent for their EV plants.72
topBecause resolution of the fight over EVs did not involve changing the law or winning a WTO dispute, trumpeting it as a win to the Korean public may prove difficult, however. Whether the resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear.
topBecause resolution of the fight over EVs did not involve changing the law or winning a WTO dispute, trumpeting it as a win to the Korean public may prove difficult, however. Whether the resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear.
topOne complaint involved the IRA's discriminatory local content provisions for electric vehicles (EVs), which were expected to hurt Korea's politically and economically important automakers.3 Ahn's persistence was successful at getting his counterpart, US Trade Representative (USTR) Katherine Tai,...
topBecause resolution of the fight over EVs did not involve changing the law or winning a WTO dispute, trumpeting it as a win to the Korean public may prove difficult, however. Whether the resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear.
topWhether the resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear.. . The impact and evolution of climate-oriented policies in a trading system that is less rules-based will be important to monitor and evaluate.
top... resolution fixes the Yoon administration's domestic political problem that the IRA caused remains unclear.. . The impact and evolution of climate-oriented policies in a trading system that is less rules-based will be important to monitor and evaluate.
topSecond, very few EV models were available for consumer tax credits at all during September-December 2022. Before the IRA, companies were subject to a cumulative 200,000-unit limit on the number of vehicles federal credits could apply to before having their eligibility phased out
topFor the US export market, they proceeded much later and increased quite rapidly. . . Conclusion. The consumer tax credits for EVs in the IRA provoked concerns by and political problems for the Korean government.
topThis section explores Korea's evolving policies toward the EV supply chain, including how they have changed in response to the IRA and subsequent engagement with US policymakers
topKorean battery companies have the potential to gain tremendously from the increased take-up of EVs in the US market and the tax credits available in the IRA through at least two channels.. . First, Korean companies dominated the handful of EV models eligible for the Section 30D tax credits once the sourcing limitations went into effect April 18, 2023
topSecond, very few EV models were available for consumer tax credits at all during September-December 2022. Before the IRA, companies were subject to a cumulative 200,000-unit limit on the number of vehicles federal credits could apply to before having their eligibility phased out.
topBefore the IRA, companies were subject to a cumulative 200,000-unit limit on the number of vehicles federal credits could apply to before having their eligibility phased out.
topThe headline of the legislation was, of course, overwhelmingly positive: It contained over $350 billion of US taxpayer commitments - through federal spending and tax credits on a variety of clean energy technologies, such as wind, solar, clean hydrogen, and carbon capture - to help the United States live up to its commitments under the Paris Agreement
top... later complain about the administration's approach to address them.41) When drafting his part of the law, Manchin had not understood that the United States did not have a free trade agreement with the European Union and other countries in NATO.
top(He would also later complain about the administration's approach to address them.41) When drafting his part of the law, Manchin had not understood that the United States did not have a free trade agreement with the European Union and other countries in NATO
topOn March 31, 2023, Treasury announced another criterion for the sourcing requirements for components and critical minerals and how countries could become "free trade agreement" partners for the sake of gaining access to Section 30D tax credits.45...
top... how countries could become "free trade agreement" partners for the sake of gaining access to Section 30D tax credits.45 Korea was already one of 20 countries with which the United States has a Congressionally approved free trade agreement.
topKorean government subsidies into their operations in other markets, such as the battery plants being built in the United States.. . Third, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement)
topKorean government subsidies into their operations in other markets, such as the battery plants being built in the United States.. . Third, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union (under the EU- Republic of Korea Free Trade Agreement)
topKorean government subsidies into their operations in other markets, such as the battery plants being built in the United States.. . Third, in terms of trade policy, Korea offers zero import tariffs to exporters in both the United States (under KORUS) and the European Union...
topKorea's imports and exports of electric vehicles. Korean imports of EVs from the United States rose to around $1 billion per year in mid-2021 and have not increased much since (they fell for a period in mid-2022), as figure 7 shows.
top... administration's approach to address them.41) When drafting his part of the law, Manchin had not understood that the United States did not have a free trade agreement with the European Union and other countries in NATO.
topIt then presents data on Korea's EV trade with the world.. . Korea's demand-side and supply-side policies for electric vehicles. Like the United States, Korea offers consumer tax credits for EVs
topThis change made vehicles assembled in Korea - and elsewhere outside North America - eligible for tax credits, as Section 45W did not contain the limiting criterion found in Section 30D (see table 1)
topIn 2022, Korean exports exceeded $8 billion, trailing only the European Union ($23 billion) and China ($20 billion) and well ahead of the United States ($6 billion) and Japan ($2 billion). In volume terms, Korea trailed only China and the European Union (panel b).
topIn 2020, the United States had the second-largest share of global greenhouse gas emissions, at 11.9 percent, trailing only China, at 28.1 percent.7 South Korea was 12th, at 1.4 percent.
topAn important part of the clean energy transition is to convince consumers in both the United States and Korea to switch from internal combustion engine (ICE) vehicles to EVs.
topIn March 2023, the Korean government established penetration rate targets for low-emissions vehicles at 26 percent by 2025, with a 22 percent penetration rate for zero-emissions vehicles like EVs.11.
topIn March 2023, the Korean government established penetration rate targets for low-emissions vehicles at 26 percent by 2025, with a 22 percent penetration rate for zero-emissions vehicles like EVs.11
top... zero-emissions vehicles.10 Although EV penetration in Korea continues to lag well behind penetration in the European Union and China, it has begun to outpace the United States and other major automaking countries, including Japan. In March 2023, the Korean government established penetration rate targets for low-emissions vehicles at 26 percent by 2025, with a 22 percent penetration rate for zero-emissions vehicles...
topOn March 31, 2023, Treasury announced another criterion for the sourcing requirements for components and critical minerals and how countries could become "free trade agreement" partners for the sake of gaining access to Section 30D tax credits.45 Korea was already one of 20 countries with which the United States has a Congressionally approved free trade agreement