State Department Official Said IRA-Related Trade Tensions Surmountable
Trade issues that arose from content requirements in the Inflation Reduction Act are "manageable," according to Geoffrey Pyatt, the State Department’s assistant secretary for energy resources. And, he said, "they will be managed." Pyatt was asked about the trade tensions the IRA has brought at a Center for Strategic and International Studies webcast event Nov. 18.
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"First, IRA is a good thing. and we need to do a better job of explaining that, if there's any doubt," he said. He said when he travels to Toyko and Seoul, he's going to remind politicians that the incentives the IRA offers will make it more profitable for them to establish or expand manufacturing in the United States. Korea was already planning to build electric vehicles in the U.S., but is disgruntled that the Korean-built EVs it sells to Americans won't qualify for tax credits as that factory is building built (see 2211080014).
He also said that the technology development that will come out of the IRA will benefit Japan, South Korea and Western Europe, too.
"We need to work through the trade aspects of it," he said, but he said it's not true that the U.S. is privileging only domestic manufacturing, mining or mineral processing. "These supply chain issues are inherently global," he said. "We all have an interest in growing this [minerals processing] market, driving innovation, and making sure China, a global rival, does not succeed ... in monopolizing these critical mineral supply chains."
The spike in natural gas prices this year has come about because of Europe's dependency on Russian petroleum and natural gas. He said, "We don't want to replace vulnerability to Russia" with vulnerability to China's dominance of clean tech.
He said that the IRA, CHIPS Act and infrastructure bill are all intended to friendshore the building blocks of the energy transition.
"Energy transition is going to happen," he said. "It's not a light switch, and it's going to have to be managed based on the circumstances of individual countries, but there's no turning back. Our international partnerships are going to be more important than ever."