The Presidential Office on the 31st assessed the Korea-U.S. trade negotiations, centered on "$450 billion in investment in the U.S. (including energy purchases) and a mutual tariff of 15%," stating, "We have created conditions to compete on par with or better than major countries." Among the investment in the U.S., $150 billion is for the 'shipbuilding cooperation fund,' which it called "the most noteworthy point in this agreement." Regarding the failure to lower the tariff on automobiles, for which the Korea-U.S. Free Trade Agreement (FTA) has already been signed to the Japanese level of 12.5%, it said, "It's disappointing." In particular, regarding the U.S. Department of Commerce's claim that "90% of investment profits are retained in the U.S.," it explained that it understands this as "reinvestment in the U.S."
◇Trump: "Complete opening of agricultural products" Presidential Office: "Just a political expression"
Deputy Minister Kim Yong-beom stated at a briefing on that day that "$150 billion for the Korea-U.S. shipbuilding cooperation fund encompasses the entire shipbuilding ecosystem, including shipbuilding, MRO (maintenance, repair, and operations), and shipbuilding materials," adding that "It will be invested in specific projects based on the demand of our corporations." He continued, "In addition to shipbuilding, an investment fund of $200 billion will also be established for areas where our corporations have competitiveness, such as semiconductors, nuclear power, secondary batteries, and biopharmaceuticals."
Deputy Minister Kim said, "There was a strong demand for the opening of our agricultural products market during the negotiations, but considering food security and the sensitivity of our agriculture, it was agreed not to further open the domestic rice and beef markets." On the other hand, Donald Trump stated on X that day, "Korea will completely open trade by accepting U.S. products, including automobiles, trucks, and agricultural products." This means that Trump and the Presidential Office announced conflicting results.
However, the Presidential Office explained that it understands this as "a political leader's expression" and that there will be no additional opening of agricultural products. According to Deputy Minister Kim, our negotiation team emphasized to the U.S. side that "Korea is already the largest importer of U.S. beef," and the U.S. side expressed agreement on this. Deputy Minister Kim indicated, "The important thing is the conversation we had with the ministers responsible for each negotiation, and there has been no agreement on discussions regarding agricultural products or any additional openings," stating, "We were able to make a deal that particularly should not be a problem in the agricultural sector."
◇Automobile tariff at 15%... "Disappointing aspect as it shakes the FTA system"
The decision to impose a tariff of 15% on automobiles was described as "a disappointing aspect." Earlier, Japan and the European Union (EU), which reached a tariff negotiation with the U.S., had a 2.5% tariff on cars exported to the U.S., while Korean cars were tax-free due to the FTA. In other words, although a demand for 12.5% was made to align with the tariff levels of other countries, this claim did not succeed. Deputy Minister Kim said, "We did our best to insist on 12.5%, but we couldn't get there," adding that "it's disappointing that the existing framework such as WTO and FTA is changing." As a result of this tariff negotiation, the existing efficacy of the Korea-U.S. FTA in the automobile sector will be abolished.
◇"The U.S. retains 90% of investment profits? Reinvestment in the U.S."
There were differences between the two countries regarding the distribution of revenue generated from the investment fund in the U.S. Earlier, Howard Lutnick, the U.S. Secretary of Commerce, stated that "90% of the investment revenue goes to American citizens" concerning the $350 billion investment the U.S. requires as a condition for reducing the reciprocal tariff. This is the same revenue distribution method applied in the agreement the U.S. made with Japan. On the other hand, the Presidential Office explained that "in a civilized nation, this is difficult," indicating that it understands capital as being 'reinvested' in the U.S.
Deputy Minister Kim said, "The original text from the U.S. states 'retain 90% of profits from the investment,'" noting, "We discussed what 'retain' means, but it is difficult to reasonably infer what the U.S. thinks since it is not specified who will invest how much and where." He continued, "The U.S. government could recommend the business and provide a purchase guarantee (off-take), and once profits emerge in the U.S., they could be extracted at once as return on equity, but does not that mean the capital should remain in the U.S.?"