South Korea has joined hands with Chile in a move to cope with the US’ Inflation Reduction Act, as well as strengthen the two countries' ties on technological and social development.
Korea’s Prime Minister Han Duck-soo and Chilean President Gabriel Boric signed a memorandum of understanding at the Chilean president’s office in Santiago on Tuesday for cooperation in sustainable mining and relevant value chains.
KOREA TO USE CHILEAN MINERALS TO COPE WITH IRAHan said that if Korea uses lithium and copper from Chile, it will significantly reduce Korea’s burden related to the IRA.
The act, which went into effect in August,
eliminates tax credits for electric vehicles made outside of North America or its free trade partners. As Chile has a free trade agreement (FTA) with the US, EVs using batteries made with Chilean minerals are eligible to benefit from the IRA.
The partnership is very important for the two countries’ economic security, Han said after signing the MOU.
Under the agreement, the two countries will jointly explore and develop key minerals such as lithium and research the modernization of smelters, with the participation of state-owned Korea Mine Rehabilitation and Mineral Resource Corp. and its Chilean counterpart on mineral resources.
Chile is the world's second-largest producer of lithium. The country is planning to set up a government-backed corporation to develop lithium as a strategic mineral, as well as form a sustainable ecosystem that consists of its development, utilization and recycling.
UPGRADE FTA, DEVELOP AGRITECH AND FURTHER DEMOCRACYThe two countries also signed two other MOUs on agricultural technology and democracy.
The agricultural tech MOU, signed by Korea’s state-run Rural Development Administration and the Chilean agriculture ministry, aims for the joint development of technologies for agriculture and carbon neutrality in response to climate change.
Additionally, Korea and Chile agreed to set up a private-public consultative group for joint research on human rights and democracy and to improve their relations.
The two countries also decided to resume talks for upgrading the Korea-Chile FTA, signed in 2004, by the end of this year.
They will elevate their bilateral relations to a "strategic partnership" from the "comprehensive cooperative partnership" they established the year the Korea-Chile FTA was put into place.
Write to Jin-Gyu Kang at
josep@hankyung.comJihyun Kim edited this article.
