Lazy response to the IRA discrimination

The government must fully use its capabilities and network to minimize any damages to Korean companies.

The government has missed an opportunity to protect the interests of Korean enterprises from the U.S. Inflation Reduction Act (IRA), contrary to its claim that it could not respond promptly because the bill passed the Congress unprecedentedly fast. But a parliamentary audit on the foreign and trade ministries discovered that the government acted slowly because it was not aware of the gravity of the impact of the bill. As a result, Hyundai Motor electric vehicle (EV) sales in America plunged 33 percent in the third quarter compared to the previous quarter.

The draft of the IRA bill was revealed on July 27. The Korean embassy in the U.S. filed a report on the draft bill and tax credit revisions on EVs to the foreign ministry on Aug. 4. Though the report itself had not been fast, Foreign Minister Park Jin said he could not see the report, because he was on a trip to Cambodia at the time. Park said he was briefed on it verbally on his way to China and was able to read the actual report upon returning home on Aug. 11. The foreign minister was able to examine the report when the bill passed the Senate — and a day before the vote in Congress.

In an electronic age, it is hard to understand how the foreign minister was not fully aware of an affair where national interests were at stake. It only suggests the ministry, as well as the minister, did not see the urgency and seriousness of the matter. The Ministry of Trade and Industry and the presidential office also had not been any better. No wonder the matter was not raised when President Yoon Suk-yeol had a phone conversation with visiting House speaker Nancy Pelosi and when Foreign Minister Park had a meeting with U.S. Secretary of State Tony Blinken.

Whether the government had done its best to minimize the damages to Korean companies raises questions. Foreign affairs and trade authorities have not responded adequately, and the cooperative system between the presidential office and related offices has not been working.

Protectionist barriers of the U.S. aimed at reining in China’s rise are expected to spread from EVs to chips. Reports say the U.S. could add chips for supercomputers and data centers to the Foreign Direct Product Rule to mandate U.S. approval for products used with U.S. design and equipment when they are headed to China. Samsung Electronics and SK hynix which sell 40 percent of their chip output to China could be affected. The government must fully use its capabilities and network to minimize any damages to Korean companies.