With the South Korea–U.S. summit three days away, attention is focused on whether the South Korea–U.S. tariff talks can reach a final agreement.
Both governments view the APEC (Asia-Pacific Economic Cooperation) summit as a "decisive opportunity to wrap up the South Korea–U.S. tariff talks," but they still show considerable differences in position on some agenda items.
However, as both sides have already fully confirmed each other's positions, some say it is difficult to predict the outcome, as a dramatic top-level agreement could still be reached on the occasion of the summit.
According to trade authorities on the 26th, the two countries are holding last-minute consultations on the proportion of direct investment, investment period, and profit-sharing structure regarding Korea's $350 billion investment funds for the United States.
Previously, on July 30, the two countries agreed that on the condition that Korea invests $350 billion in the United States, the United States would cut the reciprocal tariff it had signaled for Korea from 25% to 15%. However, differences over the details of the investment funds have delayed the signing of a memorandum of understanding (MOU).
Initially, Korea planned to make direct investments only within 5% of the $350 billion, with the remainder in the form of loans and guarantees, but talks have reportedly hit a snag as the United States demanded a Japan-style investment approach.
Japan agreed on the 4th of last month to invest $550 billion (about 782 trillion won) in the United States and signed an MOU. If the United States draws up an investment plan, Japan will deposit funds in dollars. The final decision on investment destinations rests with President Trump, and after the principal is recovered, 90% of the revenue will go to the United States.
However, Korea's maximum annual capacity for direct investment is $15 billion to $20 billion. The government is said to have proposed a long-term partitioning investment method to the U.S. side, citing fiscal burdens and instability in the foreign exchange market.
Minister Kim Jung-kwan of Trade, Industry and Energy, at a National Assembly audit on the 24th, was asked whether "a plan to invest $25 billion each year for eight years in installments" had been discussed. He said, "There were similar discussions," adding, "It is difficult to confirm the numbers."
However, the possibility that the talks could drag on cannot be ruled out. Trade authorities as well as the government say it is difficult to predict whether the leaders of the two countries can sign a U.S.-bound investment MOU at this summit.
Presidential Chief of Staff for Policy Kim Yong-beom and Minister Kim Jung-kwan of the Ministry of Trade, Industry and Energy visited the United States for the second straight week recently and continued negotiations with U.S. Commerce Secretary Howard Lutnick, but said differences remain on key issues.
Deputy Minister Kim Yong-beom said on his way back on the 24th, "There was some progress, but the two countries' positions remain tight on key issues," adding, "It is a long way from being able to expect a deal on the occasion of the APEC summit." President Lee Jae-myung also said in a CNN interview that "considerable time and effort are needed to adjust and correct the positions of the two countries," signaling an intention to control the pace of the talks.
By contrast, President Trump said, "The South Korea–U.S. tariff and trade negotiations are very close to the final stage," adding, "If Korea is ready, I am ready, too."
Meanwhile, if the tariff talks are concluded at this South Korea–U.S. summit, there is a possibility that items agreed upon at the Washington summit will also be announced together. Deputy Minister Kim Yong-beom, on a previous trip to the United States, said, "Within the government, we are not considering signing an MOU based on only a partial agreement while leaving important issues unresolved," but added, "If we announce the MOU this time, the outcomes of the first summit could be released as well."