The EU and South Korea ought to cooperate of their response to the US Inflation Discount Act (IRA), EURACTIV, South Korean Commerce Minister Dukgeun Ahn argued in an interview with EURACTIV but additionally warned the EU to not open “Pandora’s field” of protectionist industrial coverage.
The US IRA contains large-scale subsidies for US-produced electrical vehicles and batteries, thus discriminating in opposition to European and South Korean producers.
“We have now an enormous room for the EU and Korea to work collectively and to make the [IRA] system extra appropriate with the WTO, in order to not trigger pointless bother to strategically necessary elements of our trade,” Ahn mentioned.
Each South Korea and the EU have a automotive trade that feels threatened by the US invoice. Whereas Ahn recognised that it may be very troublesome to alter the regulation may the quick time period, he argued that the scenario might nonetheless be ameliorated.
“[The US] is sort of constrained by the discriminatory construction of the regulation,” he mentioned, including that the EU and South Korea might work with the US administration “to minimise the discriminatory affect of the IRA”.
“In case it turns into apparent that they can not do something or in the event that they don’t present any willingness to work with us to discover a correct answer, we should discover one other various.”
Pandora’s Field
Whereas he argued for a typical method in direction of the US, he additionally recognized a change of angle within the EU.
“The EU has lengthy been an important gatekeeper for the world buying and selling system based mostly on the rule of regulation, […] however then there are quite a few proposals that mainly incorporate the same sort of spirit of the IRA,” Ahn mentioned.
“And in case the EU steps throughout that restrict, we should take care of the opening of Pandora’s field.”
“Japan, Korea, China, each nation will interact on this very troublesome race to disregard world buying and selling guidelines, which we spent the previous few a long time to construct,” he mentioned, warning of a “myopic” and “nationalist” method to world commerce.
Requested about South Korea’s very quick and profitable financial improvement that was enabled by industrial coverage, Ahn mentioned that authorities interventions had principally ceased after the nation had joined the World Commerce Organisation.
“The function of presidency to develop the trade sector was essential, however because the inception of the WTO system, the Korean authorities hardly engaged in direct industrial insurance policies anymore.”
He argued that industrial coverage must respect commerce guidelines and {that a} reform of the WTO was essential to allow this. Nonetheless, he additionally admitted that reforming the WTO could be onerous.
“It’s a severe problem, it’s like COP 27,” he mentioned, referencing the worldwide local weather diplomacy conferences that frequently fail in making the world cut back its greenhouse gasoline emissions.
Higher entry to Korean offshore wind market
The Korean commerce minister was in Brussels in early December for the yearly assembly between the EU and South Korea to debate implementation points beneath their widespread free commerce settlement and overview different trade-related points.
On this assembly, for instance, the EU and South Korea agreed on rules for digital commerce that might lay the bottom for a future digital commerce settlement.
The South Korean delegation additionally dedicated to work in direction of eradicating the home content material necessities for his or her offshore wind farms that EU wind turbine producers understand as discriminatory.
“Inside a yr, we are going to reform the measure,” Ahn advised EURACTIV.
“CBAM fortress”
Nonetheless, he additionally got here to Brussels to precise his issues in regards to the EU’s Carbon Border Adjustment Mechanism (CBAM), which goals to place a value on CO2 emissions of imported items. The measure is at present being negotiated between the European Parliament and EU member states.
“We perceive that it is a essential coverage device,” Ahn mentioned, “however the best way the CBAM is ready raises a whole lot of concern for our trade.” Comparable issues have additionally been raised by a variety of African leaders.
Ahn hoped that the EU might design the mechanism in a method that will not “trigger an excessive amount of bother for the worldwide system”, arguing that this might additionally assist the EU to disseminate the CBAM mechanism internationally.
“I don’t assume the entire goal of the EU is to only launch a system contained in the European Union after which construct a CBAM fortress right here.”
For Ahn, the introduction of CBAM ought to occur in nearer concertation with the EU’s buying and selling companions.
“If [the EU] mismanages the entire course of, then, immediately, you by no means know whether or not this occasion will probably be thought of like a European IRA,” he warned.
[Edited by Zoran Radosavljevic]
