Time to play hardball with U.S. on chips and cars, Yang says

Korea failed to negotiate effectively with the United States on chips and cars, and the country's diplomats and legislators are to blame, one lawmaker argues.

Yang Hyang-ja, head of a special committee on the chip industry, speaks at a forum on Wednesday, at the Federation of Korean Industries in Yeouido, western Seoul. [FEDERATION OF KOREAN INDUSTRIES]

Korea failed to negotiate effectively with the United States on chips and cars, and the country's diplomats and legislators are to blame, one lawmaker argues.

"The real disaster is we don't have any cards to play while competing countries are actively engaged in negotiations," said Rep. Yang Hyang-ja on Wednesday.

The former Samsung Electronics executive and current head of a special committee on chips made the comments when discussing the best ways to respond to the U.S. Chips and Science Act and the Inflation Reduction Act (IRA) on Wednesday at a forum hosted by the Federation of Korean Industries.

Under the Chips Act, which was passed on Aug. 9, chipmakers are prohibited from transferring certain technologies to China, while the IRA requires EVs to be assembled in the United States and without certain Chinese materials and components to qualify for subsidies.

Korean companies have said that the laws will significantly affect their businesses, and the country's diplomats and elected officials have been working to get the laws adjusted in favor of these companies.

Some of the country's biggest names, including Samsung Electronics and Hyundai Motor, are affected by these laws.

Yang believes that the laws are about more than just China and are part of a broader U.S. agenda.

"In the short-run, it could be about isolating China," Yang said, "But ultimately, the U.S. aims to catch up with Korea in memory chips and Taiwan in terms of system chips."

She argues that it is as much U.S. versus Korea as it is U.S. versus China.

To weather the storm, the Yoon administration should be focused on assigning officials with deep knowledge about technology — especially semiconductors — to the negotiations and carrying out dialogues with the United States with data-driven evidence and candid assessments of Korea's technologies, she said.

"The discussions with U.S. officials should be more than nice gestures," she said. "They should know where Korea is in terms of technology and the conditions of the U.S., Taiwan and Japan. Only after that, should the government determine the direction of negotiations."

She shared her experiences when dealing with the Japanese government to deliver Korea's message after Japan instituted export restrictions in 2019.

The lawmaker researched the list of Japanese companies that could take a hit from the export restrictions. Given many tech companies, including Sony, sources memory chips from Samsung Electronics and SK hynix, she persuaded them that the restrictions could harm Japanese companies too.

Yang said the National Assembly should promptly pass bills supporting chipmakers.

One of the bills, which would reduce red tape and subsidize training programs, was put up for discussion last week at the National Assembly, while another bill, which would expand tax credits, is still pending.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]