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Korea Herald
a day ago
- Business
- Korea Herald
DP embraces, PPP shows concerns for new tariff deal
The Democratic Party of Korea on Thursday welcomed the country's trade deal to set a 15 percent tariff with the United States in exchange for $450 billion of South Korean investment in the US and the purchase of American liquefied natural gas and other energy products. Rep. Kim Byung-kee, the floor leader of the ruling party, thanked President Lee Jae Myung and the government for 'meaningful results' that meet people's expectations, adding that he would like to extend his gratitude to those in the business sector for joining forces with the government. 'Through this agreement, industrial cooperation between South Korea and the United States will become stronger. The South Korea-US alliance will become even more solid,' Kim said during a meeting held at the National Assembly in Yeouido, Seoul, Thursday. 'It is time for the National Assembly to respond. The Democratic Party will make legislative measures to strengthen the competitiveness of Korean companies, diversify export markets and more,' he added. Rep. Park Chan-dae, former floor leader of the ruling Democratic Party and a candidate for the party's leadership race, also praised the tariff agreement as 'a hard-won achievement that put the national interest above all else even under difficult circumstances.' 'I hope that this agreement will not only provide solutions for tariff-related issues but also serve as a new turning point for strengthening the Korea-US alliance and promoting cooperation between the two countries,' said Park in an online post on his social media. The main opposition People Power Party's interim leader Song Eon-seog, meanwhile, gave a more toned-down reaction. While he called the bilateral agreement between the two countries appropriate, as it is on par with that of the European Union and Japan, Song also expressed concerns over the specific provisions of the tariff deal. "Under the bilateral free trade agreement with the US, South Korean automobiles have enjoyed a zero tariff rate, whereas Japan was subject to a two-percent tariff. If the same 15 percent tariff rate is now applied to both countries, Japanese automobiles might become more competitive, which could, in effect, result in a disadvantage for Korean automakers,' Song said in a meeting held at the National Assembly on Thursday morning. The interim leader also urged clarification regarding the trade deal in the agriculture sector. 'The government stated that there will be no further opening for rice and beef markets. But US President Donald Trump's message mentioned how South Korea will accept American products, including agricultural goods,' he said. 'The government must clarify whether this means there will be a significant increase in imports of other grains or fruits except rice and beef, or whether President Trump's remarks were simply political rhetoric,' Song added.
Korea Herald
3 days ago
- Automotive
- Korea Herald
With exports down, Korea bets on domestic EV tax breaks to protect supply chain
The Korean government is considering a tax credit for domestically produced electric vehicles amid rising concerns about a potential decline in automotive production. The proposed credit is part of the ruling Democratic Party's broader plan to support key strategic technology sectors, including future mobility, clean hydrogen, displays, biomedicine, batteries and semiconductors. According to the party's bill proposals, companies could receive a corporate tax exemption of up to 30 percent of their production costs, provided both production and initial sales occur within South Korea. 'We are considering the introduction of a domestic production promotion tax program for strategic industries, but details are yet to be clarified,' said an official from the Ministry of Economy and Finance's tax policy division. With trade accounting for over 80 percent of Korea's gross national income, the government has been cautious about introducing measures that could be seen as production subsidies and trigger unfair trade disputes. However, this stance appears to be shifting, as growing global protectionism raises concerns about the potential weakening of Korea's automotive industry. 'There are many possible approaches, but after careful consideration, I concluded that a tax system that promotes domestic manufacturing is the most effective,' said President Lee Jae Myung, then a presidential candidate from the Democratic Party of Korea, during a visit to Hyundai Motor's Korean plant in February. 'Japan and the US have already moved in this direction. Korea also needs a tax deduction for local production.' Japan, for example, offers corporate tax credits of up to 400,000 yen ($2,700) per electric vehicle produced domestically. France and India are also intensifying efforts to localize their electric vehicle supply chains through targeted subsidy programs and protective tariffs. In the US, federal tax credits for domestically assembled EVs are currently available but set to expire in September. Meanwhile, the US has imposed a 25 percent tariff on imported vehicles and parts to encourage domestic production and secure its automotive supply chain. The move has already had a significant impact on Korea's auto industry, particularly among Korea's parts suppliers, many of which have been transitioning their portfolios toward EV components in response to the growing electrification trend. 'High tariffs in the US, which account for over half of our total automotive exports, led to a 16.5 percent decline in exports to the US in the first half of the year. For EVs, the drop was even steeper — 88 percent,' said Kang Nam-hoon, CEO of the Korea Automobile Manufacturers Association, calling for swift implementation of a production-focused tax incentive. Although the Korean government is currently in talks with the US to resolve tariff issues, many industry experts foresee long-term challenges for Korea's automotive base, as countries increasingly move to secure their supply chains. 'The World Trade Organization system, which once drove global division of production, is now essentially meaningless,' said Lee Hang-gu, a researcher at the Korea Automotive Technology Institute. 'There's no effective response left against the aggressive subsidy programs of the US and China. And now, every country is doing the same.' Essential move, lingering worries Experts say efforts to reduce supply costs are essential to help Korea's automotive supply chain withstand growing export challenges amid an increasingly unstable global trade environment. 'When major automakers moved production overseas, small and mid-sized Korean parts suppliers were able to follow and continue exporting their products. But that may no longer be possible,' Lee Hang-gu added. 'Many could be limited to supplying parts only for vehicles produced in Korea, but the domestic market is far too small to sustain their businesses.' In 2024, only 1.7 million new cars were sold in Korea, while the country produced a total of 4.1 million vehicles. To minimize the risk of trade disputes, Korea's proposed production promotion tax system is being designed with a restriction: It would apply only to products sold within the domestic market. Under the WTO rules, subsidies are generally subject to dispute only if they are linked to exports and cause adverse effects on other countries' industries. Additionally, the WTO allows governments to offer subsidies exclusively to domestic producers, as long as they do not discriminate against imported goods. Still, concerns remain that such a measure could weaken Korea's negotiating position as global trade tensions persist. 'We must remember that this could also encourage other countries to adopt similar policies to promote their local industries,' said Kwon Yong-joo, professor of automotive and transportation design at Kookmin University. 'While this measure might help protect our supply chain in the short term, it remains uncertain whether such support would be more effective to hold car production domestically than subsidies directed at buyers.'
Korea Herald
3 days ago
- Business
- Korea Herald
Enhancing shareholder returns, redefining worker, employer
Proposed Bill: Partial Amendment to the Commercial Act Proposed by Rep. Cha Gyu-geun (Rebuilding Korea Party) ● This bill seeks to enhance shareholder returns by requiring companies to cancel treasury shares within six months of acquisition and prohibiting the allocation of new shares to treasury stock in the event of an equity spinoff. Proposed Bill: Partial Amendment to the Commercial Act Proposed by Rep. Kim Tae-nyeon (Democratic Party of Korea) ● This bill would repeal the provision on special misappropriation, which substantially overlaps with the offense of occupational breach of trust, in order to prevent the abusive application of breach of trust charges. Pending Bill: Partial Amendment to the Trade Union and Labor Relations Adjustment Act Proposed by Rep. Lee Yong-woo (Democratic Party of Korea), Rep. Shin Chang-sik (Rebuilding Korea Party), and Rep. Jung Hye-kyung (Progressive Party) ● This bill would expand restrictions on corporate damage claims against unions and redefine 'worker' to include union organizers and members, while broadening the scope of 'employer' to include a person having de facto control over the working conditions of workers. Administrative Announcement: Partial Amendment to the Enforcement Decree of the Act on the Protection of Financial Consumers Competent Authority: Financial Services Commission ● The draft amendment would require financial companies to assess customers' loss-bearing capacity by considering factors including their investment objectives, assets, experience with investment products, understanding of financial instruments, risk tolerance, and age, when selling high-risk financial products such as equity linked securities. It would also require financial companies to provide a clear explanation of key information, including the risk of loss, prior to the sale of such products. The Korea Herald republishes a weekly legislative report by local law firm DR & AJU LLC to provide the latest information on bills approved, proposed, pending and set to be promulgated. — Ed.
Korea Herald
5 days ago
- Politics
- Korea Herald
Pro-Yoon lawmaker quizzed in special counsel probe
Rep. Yoon Sang-hyun, a lawmaker of the conservative People Power Party, was quizzed Sunday by investigators looking into influence-peddling allegations against Kim Keon Hee, former President Yoon Suk Yeol's wife. The five-time lawmaker, who was considered one of Yoon Suk Yeol's leading supporters, appeared for questioning at the office of the special counsel leading the investigation. Asked about his stance on claims he had helped Yoon and Kim interfere in the party's nomination process for a National Assembly by-election, he said he would "faithfully cooperate with" the investigation. His questioning follows a search and seizure operation to raid his home and his office at the National Assembly on July 8. The 62-year-old lawmaker, who led the People Power Party's candidate nomination for a June 2022 parliamentary by-election, was allegedly involved in arranging for the People Power Party to choose Kim Young-sun as candidate for a legislative seat representing a constituency in Changwon, South Gyeongsang Province. The constituency was considered a right-wing stronghold, and Kim was nominated by lawmaker Yoon to run for the by-election as the candidate for the People Power Party. Kim won the election and served in the National Assembly until May 2024. About a month before Yoon's botched martial law attempt, the Democratic Party of Korea revealed in late October a recording of a phone conversation between the former president and Myung Tae-kyun, who was a political consultant for the ex-president during his presidential campaign. In the phone call, Yoon, who won the presidential election in March 2022, told Myung that he had insisted to Rep. Yoon that Kim Young-sun be chosen to run for a parliamentary seat. Myung, who ran an election polling and forecasting company, said he would "never forget kindness." The phone call was recorded just before Yoon was inaugurated in May 2022, according to the Democratic Party. A separate probe by the prosecution in December indicated that Kim had wired some 80 million won ($58,000) in 11 installments in 2022 to Myung, in violation of the Political Funds Act. Both Kim Young-sun and Myung were held awaiting trial for about five months but were released in April. The criminal court cases against them are ongoing. While appearing for questioning Sunday, Yoon declined to answer a reporter's question over whether he had a discussion with the former president about candidate nominations.
Korea Herald
7 days ago
- Politics
- Korea Herald
Ministers of defense, unification, veterans affairs appointed
South Korea sees 1st civilian Defense Minister in 64 years; reinstated Unification Minister urges swift restoration of inter-Korean communication channel President Lee Jae Myung has appointed Ahn Gyu-back as the Defense Minister, Chung Dong-young as the Unification Minister and Kwon Oh-eul as the Veterans Affairs Minister, the presidential office announced Friday. Including the prime minister, this brings the number of confirmed Cabinet ministers in the Lee administration to 16 out of the total 20 as of Friday. Ahn, a five-term lawmaker of the ruling Democratic Party of Korea, said he would restore people's trust toward South Korea's military after the martial law crisis in December, during which national armed forces were deployed to the National Assembly. He added he would "not be bound by conventions and inaction" as the civilian leader of the Ministry of the National Defense. The new defense minister is a career politician who served as a member of the National Assembly's National Defense Committee from 2008 to 2025. He said he would navigate challenges faced by the South Korean military, such as a dwindling young population, the advancement of North Korea's nuclear and missile threat, heightened volatility in the geopolitical situation, and the fast-paced development of cutting-edge arms technologies, among others. He also stressed the need to achieve peace on the Korean Peninsula on the foundation of military strength. Chung, also a five-term lawmaker of the Democratic Party, visited Panmunjom, a village in the demilitarized zone in northern Gyeonggi Province, later on Friday. There, he called for a swift restoration of the communication channel between the two Koreas, as he inspected an inter-Korean emergency hotline in Panmunjom. The communication line has been cut off since April 2023. This is Chung's second time taking on the role of unification minister, having previously taken on the role from July 2004 to December 2005 under the late former President Roh Moo-hyun. Kwon vowed to boost support for veterans with low income and the bereaved families of war veterans, as well as increase rewards for the sacrifices veterans have made for the country, in his inaugural speech on Friday. Kwon was previously a conservative lawmaker from 1996 to 2008. As for the four remaining ministerial posts, Lee's administration awaits the confirmation hearing of two: Culture Minister nominee Chae Hwi-young and Land Minister nominee Rep. Kim Yun-duk. The nominees for education minister and gender equality minister recently dropped out due to controversies that grew over the course of their confirmation hearings.
