President Yoon Suk-yeol shakes hands with Japanese Prime Minister Fumio Kishida during their bilateral meeting in New York, Wednesday (local time). Yonhap

Yoon delivers US inflation law concerns in brief encounter with Biden

By Nam Hyun-woo

South Korea and Japan took a difficult first step toward improving their soured relations, as President Yoon Suk-yeol and Japanese Prime Minister Fumio Kishida had a bilateral meeting in New York, Wednesday (local time) and agreed on the need to mend ties by resolving pending issues.

Also, Yoon had a brief encounter with U.S. President Joe Biden and delivered Seoul's concerns over possible damage to South Korean companies stemming from the U.S. Inflation Reduction Act (IRA), with Biden responding that the two sides should continue their consultations.

According to the presidential office, Yoon had a 30-minute meeting with Kishida at a conference building near the U.N. headquarters, during which they shared each other's views on pending issues.

It was the first meeting between the leaders of Seoul and Tokyo since December 2019. The two countries' relations have sunk to a low point as Japan tightened its export controls on key industrial materials heading to Seoul in retaliation against a South Korean Supreme Court ruling ordering Japanese companies to compensate victims of wartime forced labor.

The Supreme Court has ordered the liquidation of assets here owned by two Japanese companies to compensate the forced labor victims, as the businesses have not complied with the compensation orders.

"The two leaders agreed on the need to improve bilateral relations by resolving pending issues, and agreed to instruct their diplomats to accelerate talks to that end, while also continuing discussions between themselves," Lee Jae-myoung, a deputy presidential spokesperson, said in a written briefing.

Yoon and Kishida also agreed to cooperate in building coalitions with the international community to protect democracy, human rights and other common values.

They also shared serious concerns about North Korea's nuclear program, including the North's new law authorizing the use of nuclear weapons in preemptive strikes for self-protection, as well as the possibility of conducting a seventh nuclear test. Yoon and Kishida agreed to cooperate closely with the international community in responding to the threat, the deputy spokesperson said.

"It was the first step toward a tangible outcome," an official at the presidential office said. "The meeting bears significance as the two leaders met and made a first step toward resolutions despite much friction between the two countries."

The meeting came after the two sides made different announcements on whether the summit will take place or not. Seoul had announced on Sept. 15 that Yoon would meet Kishida during their stay in New York for the U.N. General Assembly, but Tokyo had refrained from confirming, casting uncertainty over their meeting.

The meeting was also held at the building which was the venue for a Comprehensive Nuclear-Test-Ban Treaty event Kishida was attending, meaning that Yoon visited Kishida for the summit.

Against this backdrop, Yoon is facing mounting criticism that the meeting failed to achieve tangible outcomes.

Main opposition Democratic Party of Korea floor leader Park Hong-keun said that Yoon ended the summit "empty-handed" and that there was "no progress on the forced labor issue and other history-related matters."

President Yoon Suk-yeol and his U.S. counterpart, Joe Biden, smile during their brief encounter at Global Fund's Seventh Replenishment Conference in New York, Wednesday. On Yoon's right is South Korean Minister of Foreign Affairs Park Jin. Yonhap

Concerns over IRA

Also on Wednesday, Yoon talked briefly with Biden at the Global Fund's Seventh Replenishment Conference and a reception hosted by the U.S. president.

Seoul's presidential office had publicized that Yoon would have a summit with Biden on the occasion of his visit to New York, but the meeting did not materialize due to changes in the U.S. leader's schedule.

Instead, Yoon had a conversation with Biden on the sidelines of the event. Video footage showed that the two leaders talked for 48 seconds during the Global Fund event.

The presidential office said in a press release that Yoon voiced Seoul's concerns over the IRA, and asked for close cooperation between the two countries to address those fears when the U.S. government puts the IRA into practice.

Biden responded that he is well aware of South Korea's concerns and the two countries should continue to hold consultations, the press release added.

The IRA offers a consumer tax credit for electric vehicles (EVs) if at least 40 percent of the critical minerals in their batteries are mined or processed from the U.S. or countries that signed free trade agreements with America or were recycled in North America. At least 50 percent of the components in their batteries must also be manufactured or assembled in North America. The percentage requirements will continue to increase every year until 2032, reaching 80 and 100 percent.

There are concerns in Korea that the IRA will deal a hefty blow to Hyundai Motor and Kia, which manufacture EVs in Korea.

The two leaders also agreed to cooperate closely to implement a liquidity facility to bolster financial stabilization if needed. A liquidity facility is a program to buy debt between Seoul and Washington. Since a currency swap is a matter that should be discussed between the central banks of the two countries, the leaders discussed "a bigger concept," a senior presidential aide said.

"Various measures can be seen, such as a liquidity facility, and a currency swap between the two countries can be included in a liquidity facility," the aide said. "We expect more details will materialize through consultations between the foreign exchange authorities of the two countries."

A failed Yoon-Biden summit also drew criticism because the South Korean president skipped a number of economic events scheduled for Wednesday to meet his U.S. counterpart for less than a minute at the Global Fund event, while there were no noticeable outcomes of the leaders' talks.

"Yoon had an encounter with Biden at a reception hosted by King Charles III in London on Sunday, and the two met in the Global Fund event and a reception hosted by President Biden," another senior official at the presidential office said.

"It is important that the U.S. president has recognized Seoul's concerns, and the two leaders have ordered their national security councils to review the currency swap matter. The length of their meeting is not important," according to the official.

Also on Wednesday, Yoon had a summit with German Chancellor Olaf Scholz and agreed to enhance their cooperation in responding to global supply chain disruptions.