I report to the people. The government of the Republic of Korea agreed on the detailed terms of the tariff negotiations with the United States on Oct. 29.
On the 29th, Presidential Chief of Staff for Policy Kim Yong-beom held a briefing at the Gyeongju International Media Center and announced the results of the South Korea-U.S. tariff negotiations. Until just before the Asia-Pacific Economic Cooperation (APEC) summit, the mood was that a deal would be difficult to reach, but Kim said the parties agreed on the details and explained the specific points of agreement.
The specifics include setting an annual investment cap of $20 billion in response to the U.S. demand for $350 billion in investment, a 15% reciprocal tariff and a 15% cut in auto and parts tariffs. For semiconductors, there is also a provision to apply a tax regime that is not disadvantageous compared to Taiwan, our competitor.
After the two countries reached a broad agreement on tariff talks on July 30, the negotiations dragged on for three months and have now effectively concluded, but Kim, the Deputy Minister, hardly used the word deal throughout the briefing. The only time Kim uttered deal was when answering a reporter's question about the backdrop of the dramatic conclusion. Even then, Kim said, It is hard to speak because it is a negotiation process and there is the other side, adding, It was concluded, but it would not have happened that way if we had made concessions. This did not come in the context of saying the negotiations were concluded.
Earlier, President Donald Trump also said at the leaders' dinner held at the Grand Ballroom of the Hilton Hotel in Gyeongju that he had a successful meeting with South Korea and that the tariff negotiations had reached almost the final stage and they were able to conclude very important items. Trump's remarks also confirm that the bilateral tariff talks are not a deal but almost at the final stage.
It appears Kim used the term agreement instead of deal because there were differences between the two sides over the method of revenue sharing. Kim said revenue sharing remained a core sticking point for both countries until the very end.
He said, The Japan deal is set at 5 to 5, and once principal and interest are recovered, it is in the profit stage, so it is 9 to 1, and so we raised a very strong objection to the 5-to-5 part until the end, adding, In the process of raising issues, we were not able to drive the agreement to the point of specifying the ratio itself as the ratio we wanted.
He went on, If you simply say the wording is within 20 years, 5 to 5, then if you look at it simply, in 20 years the principal comes out, but cash flow does not come out the same every year, adding, When you run a business, some things come out a lot in the beginning, and some things do not come out much for three to five years, so in such cases, we decided to adjust once the situation becomes clear.
Kim, the Deputy Minister, added, There are implicit elements as the two countries consult, and it is difficult to state them explicitly, and said, It is regrettable that we could not put in the numbers very clearly. This suggests there were wide differences over revenue sharing and that part was left as an implicit agreement.
A specific memorandum of understanding (MOU) and fact sheets have not yet been released. Kim, the Deputy Minister, said, The MOU related to trade is almost finalized in terms of the text, and explained, Fact sheets in other areas such as security will be adjusted. According to Kim, the fact sheets in the security and trade fields will take about a day or two.