Reference News, October 25 report: According to the "Nikkei" on October 24, the informal meeting of APEC leaders will be held in South Korea on the 31st, and the South Korea-US tariff negotiations have entered a critical stage for reaching a final agreement. However, there are differences in understanding between the US and South Korea regarding the 350 billion USD investment in favor of the US that was agreed upon in July, leading to prolonged negotiations.

At the deadline for the July tariff negotiations, South Korea made every effort to reach an agreement with the United States at the last moment. Both sides agreed to reduce reciprocal tariffs and car tariffs from 25% to 15%, matching the level of Japan and the EU. In exchange, South Korea pledged to invest 350 billion USD in the US.

Of this 350 billion USD, South Korea has committed to investing 150 billion USD to promote cooperation in shipbuilding, while the remaining 200 billion USD will be invested in areas where Korean companies have competitive advantages, including semiconductors, charging batteries, nuclear power, and biotechnology.

The investment in the US mainly takes the form of loans and guarantees, and it is expected that direct investment will account for about 5% of the total amount. The South Korean government interprets it as a "fund" established to promote bilateral cooperation between the US and South Korea.

However, on September 25, President Trump of the US told reporters at the White House that South Korea would invest 350 billion USD in the US in the form of an advance payment. This triggered widespread speculation that the US was forcing South Korea to make a "direct cash investment." Trump also said that the investment targets would be selected and managed by the US.

Responding to Trump's remarks, Seong-wook Lee, Director of the National Security Office of South Korea, refuted during an interview with a local media outlet on September 27: "We cannot come up with 350 billion USD in cash."

He candidly stated: "Objectively speaking, this is not a level that South Korea can afford."

The US cited the content of the Japan-US tariff agreement in its negotiations with South Korea.

The conditions that the US requires South Korea to accept include that the implementation date of the investment must be before January 19, 2029, when Trump's current term ends, and that the investment targets will be selected by the US government, which are all included in the Japan-US agreement. According to U.S. media reports, the US also asked whether the investment amount could be increased.

According to data from the Bank of Korea, the foreign exchange reserves of South Korea at the end of September were 422.02 billion USD. The required investment amount is equivalent to 80% of South Korea's foreign exchange reserves. While the required investment for Japan is 5.5 billion USD, which is equivalent to 40% of Japan's foreign exchange reserves.

If a large outflow of dollars occurs in a short period, it may trigger concerns about exchange rate fluctuations. To minimize the impact on the foreign exchange market, the South Korean government had previously proposed signing a "unlimited currency swap agreement" as a necessary condition for the US-South Korea negotiations.

South Korean President Yoon Suk Yeol expressed concerns during an interview with U.S. media: "If we invest in the U.S. in full cash without a currency swap agreement, South Korea might face a situation similar to the 1997 financial crisis."

However, the U.S. is not enthusiastic about signing a currency swap agreement with South Korea, and the negotiations are proceeding with difficulty. According to Korean media reports, the South Korean side is seeking a compromise solution, trying to fulfill the commitment to invest in the US through installment payments over the longest period of ten years.

Due to the failure to agree on the details of the investment in the US, South Korean cars are still subject to a 25% tariff. Trump is about to visit South Korea for the APEC meeting, and the South Korean government is working intensively to resolve trade issues. (Translated by Liu Lin)

Original: https://www.toutiao.com/article/7565097152216023590/

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