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South Korean president’s first U.S. visit overshadowed by EV subsidy controversy | Technology

Yoon is expected to raise concerns about U.S. subsidy rules at a summit with U.S. President Joe Biden.

South Korea’s opposition to new U.S. rules on electric vehicle subsidies will overshadow President Yoon Sek-yeol’s first official visit to the United States, disrupting a recent show of alliance strength with Washington.

Yin was in London for Queen Elizabeth’s funeral and departed for the United Nations General Assembly (UNGA) in New York City later Monday. He will fly to Canada on Thursday for his final trip before returning home on Saturday.

In New York, Yoon will hold a summit with U.S. President Joe Biden, where the two leaders are expected to discuss North Korea’s growing weapons threat and South Korea’s growing concerns over the Inflation Reduction Act (IRA) that Biden signed last month .

The new law removes the federal tax credit for electric vehicles (EVs) produced outside North America, meaning companies such as Hyundai Motor Co. and its affiliate Kia Corp. will no longer be eligible for such subsidies.

The law has sparked complaints from government officials in Seoul, who see it as a betrayal of Biden’s promise to boost bilateral economic ties after South Korean companies agreed to make large investments and build factories in the United States.

Seoul officials said the law could violate a bilateral free trade agreement, and they have asked Washington to delay the new rules until Hyundai Motor completes construction of its Georgia plant in 2025. Yoon is likely to reiterate this request at an upcoming summit.

Several senior South Korean officials have been mobilized in recent weeks to convey their concerns to their U.S. counterparts and urge waivers, but a solution is far from clear.

U.S. National Security Adviser Jack Sullivan told his South Korean counterpart, Kim Sung-han, earlier this month that the IRA would bring “more benefits than harm” to South Korea, but promised to review the impact of the new rules.

“It’s quite complicated in structure because it’s signed into law, but there are ways to fix it,” said a senior South Korean official closely involved in the discussions, speaking on condition of anonymity because of the diplomatic sensitivity of the issue.

When asked about the IRA, Yoon’s senior economic secretary, Choi Sang-mok, said the two sides had not yet set an agenda for the summit, but the issue could be discussed based on its importance.

Yoon has also been working to make progress on other key diplomatic and security issues, such as improving ties with Japan and enticing North Korea to return to denuclearization talks.

Yoon’s office said he planned to hold his first bilateral meeting with Japanese Prime Minister Fumio Kishida in New York, although some Japanese media reported that the meeting may not take place as the legal battle over the historical dispute remains unresolved.

The president also plans to use his address to the United Nations General Assembly to reaffirm the need for North Korea’s denuclearization, according to a senior official in Yoon’s office, with Pyongyang rejecting Seoul’s recent proposal and negotiations remaining stalled.

Seoul and Washington are exploring how to restart denuclearization talks without another major weapons test or provocation by North Korea, a diplomatic source told Reuters.

“Our response to North Korea’s recent moves has been low-key in order not to give them the level of attention they want,” said the source, who asked not to be named because of the sensitivity of the issue.

“But we are sending a clear message that another nuclear test will have real repercussions, even harsher than the draconian resolutions and measures taken after the sixth test and the launch of the long-range missile.”

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