Trade, Industry and Energy Minister Lee Chang-yang, left, discusses Korea's countermeasures with top executives of Korean companies on the laws enacted by the U.S. recently, at the headquarters of the Korea Chamber of Commerce and Industry in Seoul, Thursday. Courtesy of Ministry of Trade, Industry and Energy

By Baek Byung-yeul

The government has formed a taskforce with Samsung, SK, Hyundai Motor, LG and other companies to respond to the recently established U.S. CHIPS Act and the Inflation Reduction Act (IRA), which could harm the country's semiconductor, automotive and battery industries, according to the industry ministry, Thursday.

The Biden administration passed the two acts recently under the guise of curbing inflation and fostering domestic industries. However, the two laws are threatening the local industry as they are designed to hinder Korean companies' business activities.

The CHIPS Act is aimed at offering tax credits for corporate investment in chip manufacturing in the U.S., but the beneficiary companies of the incentive will be limited from investing in China over the next 10 years, which could have a negative impact on Korean chip makers such as Samsung Electronics and SK hynix that are operating chip factories in China.

The IRA also became a headache for Korean carmakers such as Hyundai Motor and Kia and battery makers including LG Energy Solution, Samsung SDI and SK On, as the act provides tax credits and subsidies only for electric vehicles (EVs) assembled in North America.

In response to the acts, Trade, Industry and Energy Minister Lee Chang-yang had a meeting with top officials from Samsung Electronics, SK hynix, Hyundai Motor, LG Energy Solution, Samsung SDI and SK On at the headquarters of the Korea Chamber of Commerce and Industry in Seoul.

During the meeting, the minister listened to the business leaders' opinions on the possible fallout on the local industries from the two acts, saying the government will deliver their concerns to the U.S.

"We discussed the two acts' impact on our industries and talked about what the government should do. We received opinions from the industry to respond to the issue," the minister told reporters after the meeting.

"In response to the acts, the government will begin negotiations between working-level officials of the two countries next week and the minister for trade (Ahn Duk-geun) and I will visit to the U.S. to meet our counterparts to discuss the issue."

The government also decided to seek a joint response with the European Union over the IRA as carmakers and other companies there will also be negatively affected by the acts.

The minister said the government will try to resolve the issues via discuss with the U.S., but added that it will come up with measures to help local companies respond agilely to Washington's move to protect domestic industries.

"Companies here also need to strengthen their essential capabilities. This will be a challenge, but it should be taken as an opportunity to enter the enormous U.S. market. I think there will be good results in a few years if we prepare well," he said.

Companies said they expect the government to reflect their concerns to the U.S.

"At the meeting, top company executives asked the government to listen to our voices and help us reflect our concerns to their counterparts in the U.S.," an official from a local chip industry said on condition of anonymity.