This file photo, taken May 22, shows U.S. President Joe Biden, right, walking with Hyundai Motor Group Chairman Chung Eui-sun after a speech on the Korean carmaker's investment plan in the United States. Yonhap

Korea has been preparing for legal disputes with the United States over the Inflation Reduction Act (IRA) for its discriminatory features against non-North American carmakers, sources said Thursday.

The IRA, signed into law by U.S. President Joe Biden in August, gives up to $7,500 in tax credits to buyers of EVs assembled only in North America, sparking concerns that Korea's Hyundai Motor and Kia Corp. could lose ground in the U.S. market as the two Korean carmakers make EVs at domestic plants for export to the United States.

The concern has also been shared by some European and other carmakers.

According to the industry sources, Korea has recently hired a domestic law firm and has been working to select a foreign one in preparation for filing complaints against Washington with the World Trade Organization or the Korea-U.S. Free Trade Agreement (FTA) mechanism, as the law could run afoul of their principles.

Industry Minister Lee Chang-yang said earlier that South Korea will strive to resolve the matter through bilateral talks with the U.S., while reviewing bringing the case to the WTO or FTA mechanisms as "a last resort."

Korea is supposed to choose either the multilateral dispute settlement system or the bilateral one.

Seoul has been in talks with Washington to reflect its request to the U.S.' envisioned related guidelines, and South Korea is set to provide the U.S. Treasury Department with official input on the IRA this week. (Yonhap)