South Korean President Yoon Suk Yeol and U.S. President Joe Biden shake hands during a joint press conference after the summit at the White House on April 26(local). [Photo by Yonhap]
South Korean President Yoon Suk Yeol and U.S. President Joe Biden agreed to launch a Next Generation Critical and Emerging Technologies Dialogue during their summit in Washington on Wednesday, local time.
The dialogue, led by the national security advisors of Korea and the U.S., is expected to play a pivotal role in economic security cooperation and high-tech alliance between the two countries. The leaders of the two countries clearly stated the purpose of establishing the dialogue in a joint statement adopted that day, which is to deepen and expand partnership in core and emerging technologies to pursue stronger economic security and build a more resilient supply chain.
The dialogue will be convened alternately in Korea and the U.S. every year, with the first meeting being held in the second half of this year. Since the two leaders laid out the areas and direction of high-tech technologies for cooperation including semiconductors, batteries, biotechnology, artificial intelligence, and quantum technologies, the partnership should lead to outcomes that benefit both countries.
The most pressing issue for Korea is to revise the toxic clauses of the U.S. Inflation Reduction Act (IRA) and the CHIPS and Science Act. The U.S. government is making unreasonable demands, asking for trade secrets such as expected yield as the condition for subsidy benefits under the CHIPS and Science Act. The IRA also requires electric vehicles (EVs) to be assembled and even core minerals for batteries to be sourced in North America to qualify for subsidies. It is an unfavorable clause for Korean companies as it sets out requirements that are difficult to meet in a short time, but there is no other choice than complying with it to target the U.S. market.
During a joint press conference after the summit, President Biden said that the supply chain policy including the CHIPS and Science Act are not “designed to hurt China” and “it’s a win-win” for Korea. The joint statement also stated that the two presidents are committed to “continuing close consultations with a view to ensuring those Acts encourage mutually beneficial corporate investment in the United States by creating predictable conditions for business activities.”
This serves well for Korean companies, but it remains to be seen how much the U.S. government will actually accept Korea’s demands. The toxic clauses related to the U.S. semiconductor and EV subsidy policies, if remain unchanged, will eventually weigh on the Korean companies. It is imperative that the Korean government finds a solution to minimize the damage on Korean companies through the newly-launched Next Generation Critical and Emerging Technologies Dialogue.
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