South Korea and the United States have reached a trade agreement, with South Korea pledging $350 billion in investments to the U.S., though specific details of the investments remain to be finalized.
Investment Details Dispute
According to the latest reports, Kim Yong-beom, Director of the Policy Office at the South Korean presidential office, revealed that South Korean officials held a conference call with U.S. Commerce Secretary Wilbur Ross last week, during which the two sides engaged in a heated dispute over the issue of investment funds.
He stated that the United States attempted to use this leaders’ meeting to increase pressure on South Korea, demanding that the country formalize the investment details in writing. However, this demand drew dissatisfaction from South Korean officials.
On July 30, the United States and South Korea announced the conclusion of a trade agreement. Under the deal, the U.S. will reduce tariffs on South Korean exports to 15%, including automobiles. South Korea will invest $350 billion in the U.S. and purchase $100 billion worth of energy products such as liquefied natural gas.
Among these measures, the South Korean government announced the establishment of a $150 billion Korea-U.S. shipbuilding cooperation fund and a $200 billion U.S. investment fund targeting sectors beyond shipbuilding, such as semiconductors, nuclear power plants, batteries, and biotechnology. Kim Yong-beom stated that direct investment constitutes only a small portion of the total investment, with the majority to be realized through loans and guarantees.
South Korea’s JoongAng Daily reported that the investment plan proposed by Kim Yong-beom and other South Korean officials appears to emulate the so-called “Japanese model.” During previous Japan-U.S. tariff negotiations, Japan pledged $550 billion in investments to the U.S., with only 1% to 2% coming from its own funds, while loans and guarantees constituted the vast majority. However, Trump later claimed that the U.S. would reap 90% of the profits from these investments.
However, Lutnik expressed a different view on the South Korean side’s statement, saying: “South Korea will provide the United States with $350 billion (in investment), with 90% of the proceeds benefiting the American people.” Analysts speculate that the United States hopes to use the meeting between the two leaders to clearly define the specific timing and methods for raising this $350 billion.
Follow-up Negotiations
Lee Jae-myung and Trump held talks at the White House on August 25 local time. According to reports, the U.S. hopes to reach a memorandum of understanding with South Korea as soon as possible to determine the operational methods and structure of the $350 billion investment fund. Kim Yong-beom stated that South Korea will establish a task force led by the Ministry of Strategy and Finance to formulate detailed plans.
