The People Power Party played down the outcome of the South Korea-U.S. tariff negotiation agreement, saying "the very pledge to invest $350 billion in the United States is the original sin." Criticism also emerged that, relative to gross domestic product (GDP), Korea bears a heavier investment burden than Japan and that the 5% cash share initially explained by the Lee Jae-myung administration has collapsed.
Song Eon-seog, floor leader of the People Power Party, said at the supreme council meeting on the 30th regarding news of the conclusion of the South Korea-U.S. tariff talks, "The text of the agreement has not yet been released and the details are not precisely known, so assessment should be cautious," adding, "the very pledge to invest $350 billion in the United States is the original sin."
Song said, "The $350 billion scale is a very heavy burden for us," noting, "Korea is at 18.7% relative to GDP, Japan 13%, and the EU around 6%." He added, "If you combine $100 billion in energy purchases and $150 billion in corporate investment, the total is $600 billion, which is larger in total amount than Japan's $550 billion."
Song raised doubts about the negotiation results, citing that aside from part of the prepayment being changed to installments, the total amount remained unchanged, that revenue sharing was concluded as the United States demanded, and uncertainty in how investment targets would be selected.
There was also criticism that the burden of managing exchange rates in the foreign exchange market has grown. Choi Bo-yoon, chief spokesperson of the People Power Party, said, "The annual investment cap is set at $20 billion, which hits exactly the 'maximum' Korea indicated," adding, "They say it is safe, but in reality it is a structure that has used up all the buffer capacity of the foreign exchange market."
Choi also said, "It is serious that a South Korea-U.S. currency swap is missing," pointing out, "In the end, foreign exchange reserves and policy finance will have to step to the forefront of securing foreign currency."
Han Dong-hoon, former leader of the People Power Party, also joined the criticism. Han said, "The Lee Jae-myung administration said that of the $350 billion, most was in the form of guarantees and that cash would be about 5%, or roughly $17.5 billion, but yesterday's result was that $200 billion of the $350 billion was cash," adding, "$17.5 billion (about 25 trillion won) and $200 billion (about 286 trillion won) are an enormous difference."
Han said, "To fulfill a commitment of this magnitude, taxes the public will have to pay will increase, and foreign reserves will have to be run down," adding, "Accepting the U.S.-requested $350 billion figure outright was the first button done wrong."
Lee Jun-seok, leader of the Reform Party, who had applauded the outcome the day before, took a negative stance on this day. Lee said, "It is very regrettable that the South Korea-U.S. FTA framework built by the determination of President Roh Moo-hyun and the tenacious efforts of President Lee Myung-bak has been dismantled," adding, "Had we concluded the negotiations preemptively compared with Japan, we could have secured a more advantageous position, but it is unfortunate that we could not do so due to our unstable political situation this year."
He added, "In terms of investment burden relative to GDP, Japan is about 14% while we are around 20%," noting, "Although setting an annual cap of $20 billion is said to mitigate shocks in the foreign exchange market, a long-term investment pledge spanning 10 years will substantially constrain the policy discretion of future administrations."
Lee said, "Although the tariff rate was adjusted to 15%, the Ministry of Trade, Industry and Energy estimates that the resulting annual decrease in exports to the United States will reach about 18 trillion won," adding, "It remains a considerable burden for our exporting corporations."
Lee said, "It is undeniable that we have retreated significantly from the trade environment we once enjoyed, and the public is closely watching what additional consultations will proceed in other areas such as security and technology after the tariff talks," stressing, "Thorough verification and in-depth debate must take place during the National Assembly ratification process."