WASHINGTON -- The United States has given a positive response to South Korea's proposal to form a formal channel to discuss Seoul's concerns over the Inflation Reduction Act (IRA), a South Korean official said Wednesday.

Deputy Trade Minister Ahn Sung-il also said the US fully understands South Korea's concerns over the new US law and that it is ready to discuss ways to minimize potential damage from the newly enacted law to South Korean firms.

"They too were taking this issue very seriously and were aware of our concerns," Ahn told reporters before heading home following his three-day visit to Washington.

"(They) said they consider South Korea as an important ally and that they are ready, so we should continue discussing the issue," added Ahn.

US President Joe Biden signed into law the Inflation Reduction Act on Aug. 16, allowing a government tax credit of up to US$7,500 for each electric vehicle purchase.

The law, however, offers such incentives for only vehicles assembled in North America with batteries produced in the US, effectively excluding all electric vehicles produced in South Korea and other countries from the benefit.

Seoul says the US law violates the US-Korea free trade agreement, under which products from either country are given the same treatment as domestic products or have the same advantages as products from countries with most-favored nation status.

Ahn said Seoul proposed forming a joint communication channel to specifically discuss issues related to the IRA, and that the US responded "positively."

He added the countries will further discuss the specifics of such a communication channel when Trade Minister Ahn Duk-geun visits Washington early next week for talks with his US counterparts. (Yonhap)