According to South Korea’s trade minister, the United States and South Korea are working on a “concrete solution” to settle their disagreements regarding subsidies for electric vehicles.

Ahn Duk-geun said to CNBC’s Chery Kang on Wednesday, “We’ve established a specific conversation channel to address this particular issue, and we are delighted that the U.S. administration fully engaged with us to fix the concerns.”

He was responding to worries over EV subsidies that would disadvantage South Korean automakers, with some South Korean officials labelling the action a “betrayal” of the two nations’ mutual confidence.

President Joe Biden ratified the Inflation Reduction Act (IRA), a $430 billion climate and energy bill, in the middle of August.

Consumers can receive up to $7,500 in federal tax credits for buying new electric vehicles built in the United States; international automakers like Kia and Hyundai are not included in this programme.

After Tesla, Hyundai is the second-largest EV seller in the United States.

The South Korean government is preparing for “all options,” including submitting legislative modification requests to Washington, Ahn said. “We are disturbed to see in particular that this clause [was] inserted in the IRA without much prior talks.”

His remarks lacked the vehemence of the previous vitriol from Seoul leaders.

In Seoul, Kamala Harris
On Thursday, U.S. Vice President Kamala Harris met with President Yoon Seok-yeol of South Korea in Seoul to discuss the issues that South Korean automakers are facing.

The U.S. vice president acknowledged the issues mentioned, and both leaders agreed to “continue to communicate” on them, according to a White House readout of the meeting.

In a statement about the same meeting, Yoon’s office quoted Harris as stating she would “look into measures to assuage South Korea’s worries in the process of enforcing the law.”

Violate WTO regulations?
According to South Korean and European officials, the IRA’s tax credit provisions violate World Trade Organization regulations, according to Reuters.

The industry ministry of South Korea acknowledged to CNBC that Seoul will consider whether to submit a formal complaint to the WTO on such worries.

The Korean Confederation of Trade Unions, which represents employees from domestic South Korean firms like Kia and Hyundai, criticised the U.S. measures last week and claimed they were “unilateral” and “U.S.-centric,” adding that they might make the uncertainties surrounding the current state of the global economy worse.

A “significant trading partner” is China.
Ahn observed that as a result of heightened U.S.-China trade tensions, South Korea’s export-dependent economy is in fact “experiencing the decoupling phenomena.” He didn’t go into more detail.

He also mentioned that Beijing plays a crucial strategic role for South Korea and that the country continues to struggle with a trade deficit as a result of rising energy prices.

China is still a significant trading partner for Korea, according to Ahn.

“In these difficult and unpredictable economic times, I believe that the stabilisation of this trading relationship will play a very crucial role in securing the world supply.”