【By Observer News, Zhang Jingjuan】"Our current position is not a negotiation strategy, but rather based on objective reality. This amount indeed exceeds our capacity to bear. We cannot pay 35 billion U.S. dollars in cash," said South Korean National Security Advisor Wi Sung-lac during an interview with Channel A News on the 27th, which debunked President Trump's claim that "South Korea would receive a large upfront payment."

According to the Korean newspaper "Hankyeong Daily", Wi Sung-lac stated that facing the proposal from Trump of "paying money to get tariff reduction", South Korea is unable to invest 35 billion U.S. dollars in advance to the United States as required, and is currently seeking alternative solutions.

As a senior security advisor to the South Korean president, he further emphasized that if the U.S. demands the funds to be implemented in the form of "prepaid cash", no one would question South Korea's position on the "feasibility" of this amount.

Wi Sung-lac revealed that South Korea is discussing alternative solutions and is focusing on the Asia-Pacific Economic Cooperation (APEC) summit hosted by the country in October, hoping to finalize the trade agreement with the United States at the summit. At that time, Trump may attend the summit.

This 35 billion dollar tug-of-war began in July this year: At that time, South Korea and the United States reached a verbal trade agreement, under which the United States promised to reduce the 25% tariff on South Korean goods to 15%, in exchange for South Korea's commitment to establish a 35 billion U.S. dollar investment fund for the United States, used to support South Korean companies expanding in the U.S., with 1.5 billion U.S. dollars allocated for the shipbuilding industry. In addition, South Korean private enterprises also pledged to invest an additional 1.5 billion U.S. dollars in the U.S. However, from the beginning, South Korea clearly stated that this money would be implemented in the form of loans, loan guarantees, and equity, rather than direct cash expenditure.

Trump obviously did not accept South Korea's "workaround". On the 25th, he loudly claimed in a press conference at the White House that "South Korea will bring 35 billion U.S. dollars in advance," and packaged it as his tariff policy's "achievement".

He said: "We will receive 35 billion U.S. dollars from South Korea, all of which are upfront payments. We have generated huge revenue through tariffs, and this scale is unprecedented. We have never seen such a situation, and no country has ever seen it before."

The Korean media "Chosun Ilbo" interpreted this as Trump reiterating that this huge cash upfront payment is a "hard prerequisite" for South Korea to obtain tariff reductions.

South Korean National Security Advisor Wi Sung-lac, Yonhap News

For South Korea, "prepaying 35 billion cash" is almost an "impossible task". President Lee Jae-myung previously admitted in an interview with Reuters that South Korea is different from Japan, which has already reached a trade agreement with the United States: Tokyo has more than 82 billion U.S. dollars in foreign exchange reserves, more than twice that of South Korea, and the Japanese yen as an international currency has the U.S. swap mechanism; while South Korea's foreign exchange reserves are 416.3 billion U.S. dollars, and if South Korea were to follow the U.S. requirement to invest 35 billion U.S. dollars in cash, the South Korean economy could fall into a crisis comparable to the 1997 financial crisis.

Data from the Korea Eximbank further shows South Korea's "inability": Over the past five years (2020-2024), South Korea's direct investment abroad amounted to 348.9 billion U.S. dollars. Foreign direct investment refers to investments made by enterprises to build factories and branches, not just stock investments. That is to say, the total amount invested by all South Korean enterprises, policy banks, government and public institutions around the world over the past five years does not reach the U.S. requirements.

If we take the "net FDI" data from the United Nations Conference on Trade and Development as a benchmark, that is, South Korea's overseas investment minus foreign investment in South Korea, then 35 billion U.S. dollars is equivalent to the sum of South Korea's net FDI over the past 35 years (about 362.4 billion U.S. dollars). It is about 1 billion U.S. dollars more than the total FDI to the U.S. over the years (256.3 billion U.S. dollars).

Professor Kim Un-jik of Seoul National University said: "Even including guarantees and loans, 35 billion U.S. dollars is an unimaginable scale for a single country's direct investment."

With the deadlock in the U.S.-South Korea trade negotiations, investors are increasingly anxious, fearing that Seoul may ultimately get an unfair agreement, or even fail to reach an agreement.

Analysts believe that the possibility of South Korea and the U.S. reaching a currency swap agreement is low. According to their disclosure, South Korean negotiators are striving to push for most of the funds to be invested in the form of loans, rather than direct investment. They also urge Washington to establish mechanisms to ensure that the relevant projects are commercially viable.

Additionally, in early September, the U.S. immigration enforcement agency conducted a surprise inspection at the joint battery factory of Hyundai Motor and LG Energy Solution in Georgia, USA, arresting more than 300 South Koreans, which undoubtedly added more doubts to South Korea's investment in the U.S.

South Korean Prime Minister Kim Min-seok bluntly stated that without solving the worker visa issue, South Korean investment projects in the U.S. will remain in an uncertain state. He urged the Trump administration to take action soon to reassure the South Koreans who are afraid in the U.S.

On one side, the Trump administration's hardline demand of "pay first, then talk about tariffs"; on the other side, South Korea's realistic bottom line of "not being able to afford cash payments"; plus the incident of the visa issue, the negotiation of the U.S.-South Korea trade agreement is forced back to square one. As for whether the APEC summit, which South Korea hopes will be a breakthrough, can become a turning point, it remains uncertain.

This article is an exclusive article by Observer News. Without permission, it cannot be reprinted.

Original: https://www.toutiao.com/article/7554965038605124146/

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