Opposition party's attempt to enact Korean version of IRA triggers concerns

• Published date: 23 February 2023
• Publication title: The Korea Times

The main opposition Democratic Party of Korea (DPK) recently indicated its intention to propose legislation similar to the U.S. Inflation Reduction Act (IRA), raising concerns that such a move would end up triggering conflicts with major trading partners, such as the U.S, Japan and the EU.

"If Korea enacts a law similar to the U.S. IRA, it could be considered a violation of the WTO agreement on subsidies, although it remains uncertain whether the U.S., EU and Japan would point out the matter," said Cheong In-kyo, professor of international trade at Inha University.

Last Friday, DPK Chairman Lee Jae-myung said in a meeting at the National Assembly that his party will prepare for the enactment of the Korean version of the IRA, a law signed by U.S. President Joe Biden which denies tax incentives for the purchases of electric vehicles assembled outside of North America.

"Instead of having a rosy outlook and avoiding the reality, the administration should reconsider its trade strategies from scratch," the lawmaker said. "The Korean version of the IRA will be a law that promotes investments and consumption in renewable energy and green industries and that supports the construction of relevant infrastructure."

His remarks came a day after Rep. Kim Sung-whan, the DPK's policy board head, said that the party will legislate the Korean version of the IRA as soon as possible to nurture domestic industries related to renewable energy and the Green New Deal.

"At this moment, a new trade protectionism prevails around the world to cope with climate change and increase jobs in each country," Kim said.

Late last year, Rep. Sim Sang-jung of the minor opposition Justice Party urged the government and the ruling People Power Party to enact a law similar to the U.S. IRA, in order to prevent the outflow of manufacturing jobs.

The Ministry of Trade, Industry and Energy has remained cautious about the opposition lawmakers' attempts to legislate the Korean version of the IRA, given that they have yet to specify the details of their bills.

The government, however, is said to be reluctant to take retaliatory measures...