S. Korea sees EU’s new acts on critical raw materials, net-zero goals as ‘not discriminatory’

SEOUL, March 17 (Yonhap) -- The latest acts announced by the European Union on critical raw materials and net-zero goals do not contain discriminatory clauses against foreign companies, unlike the United States' Inflation Reduction Act (IRA), South Korea's industry ministry said Friday.

On Thursday, the EU proposed the European Critical Raw Materials Act and the Net-Zero Industry Act with the goal to ensure stable supply chains of key industry materials, which are essential for renewable energy development and other major industry sectors, by reducing dependence on China and to boost its manufacturing of clean technologies for green growth.

"Unlike the U.S. IRA, the Critical Raw Materials Act does not include discriminatory clauses against foreign companies or requirements regarding the usage of minerals from certain regions. The net-zero act is also expected to apply to both EU and non-European firms," the ministry said in a release.

"We will closely analyze the two acts to figure out their impacts on our businesses and seek responses by holding meetings with companies concerned," it added.

The Critical Raw Materials Act calls for not more than 65 percent of the EU's annual consumption of each strategic raw material from a single third country.

It also stipulates that certain large companies will have to perform an audit of their strategic raw materials supply chains, comprising a company-level stress test.

The Net-Zero Industry Act calls for the EU's overall strategic zero-emission technologies manufacturing capacity to reach at least 40 percent of its deployment needs by 2030, according to the European Commission.

South Korea has been closely watching the developments regarding the acts over their possible impacts on its business entities, as the IRA has been a major concern for South Korean carmakers and other companies due to its discriminatory features.

The IRA gives up to US$7,500 in tax credits to buyers of electric vehicles (EV) assembled only in North America. It also requires EV batteries to be made with a certain proportion of minerals mined or processed in the U.S. or countries or regions that have free trade agreements with Washington.

"It would take around one to two years for the acts to take effect due to legislative procedures. We will come up with detailed plans of response by sector and actively have discussions with the EU authorities to minimize any burdens and maximize new chances," the ministry said.

Source: Yonhap News Agency