The United States and South Korea reached a tariff negotiation, but the preparation of an official agreement to support this is not progressing quickly. As differences in interpretation between the two countries arise over key issues such as the opening of the rice market, discussions regarding the format and timing of documentation have yet to begin.
The government plans to begin discussions on documentation soon, judging that it is difficult to ensure the implementation of negotiations based solely on verbal agreements. It is expected that the upcoming summit between the leaders of the United States and South Korea will provide an opportunity to prepare the agreement, but at the same time, there is a possibility that additional demands from the United States may surface during the meeting. This has led to calls for the finalization of details before the meeting.
According to the Ministry of Trade, Industry and Energy on the 5th, the government sees a significant need for documentation to secure legal binding power regarding the results of the tariff negotiations with the United States. A ministry official noted, "It is difficult to guarantee long-term implementation with only verbal agreements with the United States."
Previously, the government concluded negotiations with the United States on the 31st of last month, reducing the mutual tariff rate from 25% to 15%, a 10 percentage point decrease. As a condition for this, it prepared a special strategic industry cooperation fund of $350 billion that includes shipbuilding, to support U.S. investments, and agreed to import $100 billion worth of U.S. energy.
The government plans to continue follow-up negotiations regarding the specific fund management structure and the reduction of non-tariff barriers. Koo Yun-cheol, the Deputy Prime Minister and Minister of Economy and Finance, who returned home after concluding the negotiations on the 1st, stated, "The devil is in the details, but I believe the angel is also in the details," adding, "We will do our best to ensure that the U.S. and South Korea can have win-win economic cooperation."
However, as the explanations from both governments regarding the key issues of negotiations, such as the opening of the rice market and fund revenue distribution, vary, anxiety is increasing. Regarding the opening of the rice market, the South Korean government maintains that it has "not discussed this," while the United States mentioned in an official briefing that it would be "a historic opening for U.S. products."
Regarding fund revenue distribution, while the United States claims that "it will take 90% of the revenue," the government has noted that "the structure of the fund itself has not yet been specified." The lack of a formal agreement has become a new source of conflict.
The government believes that the upcoming summit between President Lee Jae-myung and U.S. President Donald Trump will provide an opportunity to prepare the agreement, as there is a high likelihood that the details of follow-up negotiations will be determined during the meeting.
However, voices inside and outside the government are suggesting that the details of the negotiations should be finalized before the summit. This is due to the nature of President Trump, who may demand additional openings in sensitive agricultural products such as rice and beef, as well as in the field of digital trade at the meeting.
Park Tae-ho, the former head of the Trade Negotiation Headquarters, stated, "The government's initial decision to pursue a comprehensive agreement has not been met with a comprehensive result this time," adding, "There may be additional demands regarding defense costs outside of trade at the summit." He continued, "It would be better to clearly finalize the negotiations before placing any burden on President Lee."
A government official also elaborated, "Given past actions, it is clear that President Trump will exert pressure on President Lee regarding additional openings in the beef and rice markets in front of him."
The government seems likely to prioritize a 'binding agreement' with legal force, but there is also a possibility of adopting a 'step-by-step documentation' approach, where they document the implementation details without binding force, similar to the agreement reached with the United Kingdom in May.
A Ministry of Trade, Industry and Energy official explained, "Ultimately, documentation is a matter of time," adding, "We need to have more specific discussions with the United States about the agreement or the binding document."
Meanwhile, Japan, which reached a tariff negotiation with the United States ahead of South Korea, is also experiencing differences in positions regarding the negotiation results. The United States regarded Japan's '$550 billion investment' condition as 'equity', whereas Japan stated that it would only invest '1-2%' and that the scale included guarantees and equity.
However, Japan is responding by maintaining strategic ambiguity, stating, "If we document it, there may be new demands."