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South Korea regards the subsidy and discrimination of electric vehicles in the United States as “betrayal”; “South Korea may think it’s like being stabbed in the back”
The meeting of us, Japanese, and ROK security chiefs ended in Hawaii on the 1st. When the White House tried to focus on “safeguarding freedom and opening up in the Indo Pacific region”, coordinating the North Korean nuclear issue, economic security and other topics, a lingering idea in South Korea was to coordinate “trade injustice” with Washington.
So there was what the media called a “rare” Scene:
While the head of the national security office of the Republic of Korea was discussing with the United States on strengthening security cooperation in Hawaii, a South Korean economic and trade delegation was negotiating in Washington; On the day of the meeting of senior national security officials of the United States, Japan and South Korea, the South Korean parliament passed a resolution urging the United States to give the same tax subsidies to South Korean car companies
Faced with the resentment of South Korean public opinion that “South Korea has become a big enemy”, how does the United States react?
“Surprised” and “regretted”, but so far no satisfactory reply has been given to the ROK and no special solution has been proposed.
“Can’t we share values and interests?” Some South Korean media could not help questioning.
At the critical moment when Washington forced South Korea and other countries to form the “chip Quartet alliance”, this question is a timely reminder to Seoul.
The meeting of us, Japanese, and ROK security chiefs ended in Hawaii on the 1st. During the two-day bilateral and trilateral talks, senior national security officials of the three countries talked about many topics, including the DPRK nuclear issue, extended deterrence strategic consultations, economic security, and the “China issue”.
It can be seen that the US side has paid special attention to creating an atmosphere of security cooperation among the three countries this time.
Before the National Security Council meeting of the White House, it was “expected” that US national security adviser Sullivan would discuss “how to safeguard freedom and openness in the Indo Pacific region, including how to deal with the growing security challenges from China” with Japanese national security director Takeo Akiba and South Korean national security chief Kim Sung Han.
In order to highlight the “security” content of the meeting, after the meeting of the national security chiefs of the three countries, Sullivan also arranged to meet with officials of the US Indo Pacific Command to discuss the US military alliance. The purpose is also to “safeguard freedom and openness in the Indo Pacific region”.
However, judging from the reaction of public opinion in Seoul and the ROK, the ROK side, while echoing the security and other concerns, has something else on its mind.
When introducing the main topics of the meeting of the security chiefs of the ROK, the United States and Japan, Yonhap specifically mentioned that “the three parties also discussed the exclusion of electric vehicles in the ROK and Japan from the scope of subsidies under the US inflation reduction act.” Chosun Ilbo and other Korean media also mentioned this issue more or less.
During the trilateral meeting of senior national security officials, the issue of us subsidies and discrimination against South Korea’s electric vehicles is rapidly fermenting in South Korea.
The origin of the matter is the “2022 inflation Reduction Act” just landed by the United States.
On the 16th of last month, this bill with a total amount of 750 billion US dollars was signed into law by President Biden. One of the important contents is to provide us consumers with a tax credit of up to US $7500 a year for purchasing electric vehicles produced in North America.
This clause immediately aroused the dissatisfaction of the ROK. Because Hyundai, Kia and other major Korean automobile companies currently do not have electric vehicle factories in the United States.
The “inflation Reduction Act” of the United States is tantamount to excluding products assembled or produced in South Korea and exported to the United States from the scope of subsidies.
South Korea regards this new US regulation as “betrayal”; South Korea “may think it’s like being stabbed in the back”
The current and former senior officials of South Korea expressed dissatisfaction in the media.
On September 1, that is, the day of the meeting of the heads of security of the ROK, the US and Japan, the ROK Congress passed a resolution specifically aimed at the US “inflation Reduction Act”, urging the us to provide equal tax incentives to electric vehicles produced in the ROK based on the Korea us free trade agreement.
The day before, an economic and trade delegation led by an Shengyi, director of the new trade order strategy section of the Ministry of industry, trade and resources of the Republic of Korea, had just concluded a three-day trip to Washington, D.
In contrast to Seoul’s attitude of “taking the overall situation of relations with the United States into consideration”, which mainly expresses concern and calls for strengthening consultations to reduce the losses of the ROK, some Korean media criticized Washington in more straightforward terms for ignoring the economic interests of the ROK.
A commentary article in the Korean Central Daily bluntly stated that “only South Korea has become the enemy” in the US electric vehicle subsidy system. “Can’t we share values and interests?” The article also tried to expose the essence of the Biden administration’s “value diplomacy”, saying that “when Biden’s honeyed words are punctured, the value alliance seems to be in vain in the face of national interests”. “In the face of national interests, value is just fame.”.
In the face of the general backlash from the Korean government and public opinion, the US side’s response was quite subtle.
Yonhap said that regarding the issue of electric vehicle subsidies raised by Kim Sung Han, head of the national security office of South Korea, Sullivan only said that “it is necessary to seriously study this law again”. He also tried to play down this issue, saying that the US inflation reduction bill is not only about the field of electric vehicles, but also includes “the strategic direction of how to reorganize the supply chain between liberal countries”.
The US side’s perfunctory attitude was already very obvious.
When the South Korean economic and trade delegation visited the United States and raised the issue of subsidy discrimination, the US side responded by “expressing surprise” and “expressing regret”, but did not propose a special solution.
South Korea’s dong-a-ilbo disclosed that in response to the South Korean delegation, the US admitted that the US government lacked discussion on “problematic clauses” during the emergency passage of the bill by the US Congress, claiming that it was “analyzing” the impact of the bill’s implementation.
What is lack of discussion? That is, the interests of the ROK and other allies have not been taken into consideration at all.
Even though the ROK has stepped up its negotiations, judging from the US legislative process and Washington’s unwilling attitude, “it is very difficult for the Biden administration to formulate a solution that satisfies the ROK in a short time”.
Even Korean officials and media have seen this.
The “betrayal” and “stabbing” of the United States around electric vehicles are a timely reminder to South Korea. Especially at the critical moment when the United States is courting strong groups such as South Korea to form the “chip Quad alliance”.
It is reported that a preliminary meeting of the “chip Quad alliance” will be held after the Mid Autumn Festival, and South Korea has announced that it will attend. One analysis believes that the United States wants to win over South Korea in the “chip Quad alliance”, so it may “give a wide berth” to South Korea on the issue of electric vehicles.
There have been precedents before.
The US Department of Commerce once said that it would expand the ban on equipment export to Chinese chip enterprises from the 10 nm process to 14 nm, and foreign enterprises that set up factories in China would also be subject to this restriction.
The 14 nanometer process is usually a watershed to distinguish cutting-edge semiconductors. If this ban is strictly enforced, it will mean that the factories of Korean enterprises in China will not be able to import high-end equipment using extreme ultraviolet rays to produce cutting-edge semiconductors.
However, the worries of Korean semiconductor companies did not last long. At the end of August, it was reported that the US Department of Commerce said that the export ban would not affect Korean enterprises’ factories in China.
In addition to the issue of electric vehicles, South Korea also hopes that the United States can once again “exempt” South Korean enterprises in the chip field.
In the so-called “chip act” recently introduced by the United States, there are also provisions involving Korean enterprises.
On the one hand, foreign companies that build semiconductor factories in the United States will get 25% tax exemption. South Korea’s Samsung Electronics and SK Hynix will be the beneficiaries.
Samsung plans to invest nearly $200 billion in the next 20 years to build 11 chip factories in Texas. Sk Hynix has also been revealed recently that it will start building a chip packaging plant in the United States around the first quarter of next year.
On the other hand, the “chip act” also stipulates that companies receiving government subsidies are not allowed to make new investments in advanced technologies less than 28nm in China within 10 years, otherwise they must return the full subsidies.
Giving the green light to chips manufactured below 28nm is a last resort for the United States.
At present, many products, such as televisions and panels, use chips below 28 nm. If the supply to China is cut off in this respect, there is no way to find an alternative manufacturer. In that case, the global industrial chain will be interrupted.
However, South Korean enterprises will also be severely hit by the limit of less than 28 nanometers.
Samsung and SK Hynix are the world’s top two memory semiconductor manufacturers, and their share of memory chips produced in China is relatively large.
Samsung produces 15% of the world’s NAND flash memory output at its factory in China, accounting for 40% of Samsung’s total output; Sk Hynix produced 15% of the global DRAM output in Wuxi, accounting for 50% of its output.
Obviously, the Korean government and the industry have a beautiful imagination. It seems that it is inevitable for South Korea to participate in the “Quad alliance of chips”, so it is hoped that the United States can give special treatment to its “economic security ally”.
However, whether it is the “chip act” or the “chip Quad alliance”, the intention of the United States is on the table: in the short term, China is excluded from the semiconductor industry chain, and in the long term, a complete industrial chain around the semiconductor industry is established in the United States.
What else will happen in Korea then?
Zhan Debin, a professor at the Shanghai University of international business and economics, said that some South Koreans have naive illusions about the United States, thinking that South Korea and the United States have the same “values” and that they can “eat the same meal”.
After taking office, Yin Xiyue’s government stressed on various occasions to rebuild the Korea US alliance and strengthen the Korea US alliance. At the same time, it also said that it would reduce its dependence on China. In the end, the United States did not “reciprocate” with the United States, but “betrayed”.
If the United States does not really respect South Korea and does not care about its opinions, South Korea’s crying will not have any practical effect if it is stabbed in the back.
Zhan Debin said that these South Koreans have forgotten that one of the reasons why the United States has paid more and more attention to South Korea in recent years is precisely the result of closer Sino South Korean relations; They also forget that the United States is a country that pursues “America first” and “America first” from the bottom up. Human rights and values are all pretexts that can only be used when necessary.
The same is true of the nuclear issue on the Korean Peninsula. If the ROK places too much emphasis on us ROK relations, it will end up falling into the trap dug by the United States, which will make the ROK fall deeper and deeper in the arms race.
Zhan Debin believes that if South Korea follows the United States at the expense of Sino South Korean relations, it will be stabbed in the back by the United States.
If South Korea wants to enhance its own value in the region, it is precisely to improve China South Korea relations so that it will not be squeezed by the United States again and again.