On 16th, Presidential Chief of Staff for Policy Kim Yong-beom's trip to the United States is a sign of "progress" in follow-up talks after the U.S.-Korea tariff negotiations. Ahead of the U.S.-Korea summit to be held on the sidelines of the APEC (Asia-Pacific Economic Cooperation) summit in Gyeongju at the end of this month, the U.S. Treasury publicly noted the "possibility of a deal within 10 days." Although there had been major differences over how to structure the $350 billion investment, the presidential office recently said it received a "meaningful" alternative from the United States. With the United States clashing with China over rare earths, there are signs Washington wants to quickly wrap up talks with Korea and focus on China.
That morning, before departing for Washington, D.C., via Incheon International Airport's Terminal 2, Kim told reporters, "We view the negotiations very positively." He also said, "Previously, the relevant departments in the United States did not give the impression of communicating very closely, but this time the Treasury, USTR, and the Commerce Department are communicating quite closely." This means Washington is actively coordinating its internal positions to conclude the talks with Korea.
For this trip, Kim, Minister of Trade, Industry and Energy Kim Jung-kwan, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, and Yeo Han-koo, head of the Trade Negotiations Office at the Ministry of Trade, Industry and Energy, among others, deployed the full negotiating team. Coinciding with the IMF–World Bank annual meetings, they are set to meet key U.S. negotiating "point persons," including U.S. Commerce Secretary Howard Lutnick. In particular, they will visit the Office of Management and Budget (OMB) at the White House on 17th Korea time.
The day before, the presidential office spokesperson's office sent a notice text to the press corps, saying, "We are in the process of narrowing differences on key issues in the U.S.-Korea tariff negotiations." Compared with the internal stance of the presidential office until recently that there had been "no particular progress," this also acknowledges movement in the talks. Minister of Trade, Industry and Energy Kim Jung-kwan also said before departing that day, "On various aspects related to the (shock to the) foreign exchange market, we have narrowed much of the gap in understanding with the United States."
During the negotiations, a plan to invest directly via a won-denominated account instead of dollars was also discussed. The $350 billion equals 84% of Korea's foreign exchange reserves, and accepting the U.S. position would inevitably shock Korea's foreign exchange market and the broader economy. For that reason, the Korean government proposed a U.S.-Korea "unlimited currency swap agreement" as a safeguard, but did not receive a definite answer. However, after fully explaining that a Korean economic crisis would also be a negative for the United States, Seoul sent a revised proposal last month and received "a response worth considering" from Washington, a senior presidential office official said.
The U.S. side also agrees that a deal is near. U.S. Treasury Secretary Scott Bessent said in a CNBC interview that day, when asked, "What trade negotiation are you most focused on now, excluding China?" that "the negotiation with Korea is almost in the final stage," adding, "There are issues of detail, but we are adjusting specifics." Regarding the request for an unlimited U.S.-Korea currency swap, he said, "I am confident the difference in views can be resolved," and added, "We are currently in talks, and we expect some outcome within the next 10 days."
The core of the negotiation is the ratio of direct equity investment. When our government announced the outcome of talks with the United States in late Jul., it said most of the $350 billion would be in loans and guarantees, with direct investment a minority. However, after the agreement, the presidential office said the memorandum of understanding (MOU) actually sent by Washington specified that most of it would be dollar-denominated direct investment. Earlier, in a briefing in New York last month, Deputy Minister Kim said, "Under international investment practice, most would be loans and guarantees, with some direct investment. We wrote this in our memorandum," adding, "The MOU document sent by the United States was drastically different."