【By Observer Net, Yuan Jiaqi】

Although the South Korean side emphasized that if the U.S. demand for a large investment in trade negotiations is met without safeguards, the country may face a serious financial crisis, President Trump still insisted on requiring South Korea to make an "upfront payment".

According to Reuters on the 26th, on Thursday (25th) local time, Trump, during a press conference at the White House, boasted about his "tariff" achievements as usual, saying, "In the past, other countries were not fair to us, but now it's different, the United States has never had such a good situation... Thanks to tariffs and trade agreements, the amount of transactions currently being carried out reaches $95 billion, and before that we didn't get a penny."

He then said, "We will get $55 billion from Japan and $3.5 billion from South Korea, all of which are upfront payments (upfront). We have obtained huge income through tariffs, this scale is unprecedented. We have never seen such a situation, no country has ever seen it."

The South Korean media, Chosun Ilbo, interpreted that Trump's statement aims to reiterate that this huge sum will be the "precondition" for South Korea to receive tariff reductions under the bilateral trade agreement.

On September 25th local time, Trump held a press conference at the White House. White House video screenshot

This July, South Korea and the U.S. verbally reached a trade agreement, in which the U.S. would reduce the tariff on South Korean goods from 25% to 15%, in exchange, South Korea promised to establish a $3.5 billion fund for investment in the U.S., used to support South Korean companies expanding in the U.S., with $1.5 billion for the shipbuilding industry. In addition, South Korean private enterprises also pledged to invest an additional $1.5 billion in the U.S.

However, recently, President Lee Jae-myung of South Korea expressed difficulty when interviewed by Reuters.

He explained that South Korea is different from Japan, which has already reached a trade agreement with the U.S.: Tokyo's foreign exchange reserves exceed $82 billion, more than twice that of South Korea, and the yen is an international currency with an U.S. swap mechanism; while South Korea's foreign exchange reserves are $41.63 billion, and if South Korea follows the U.S. requirements to invest $3.5 billion in cash, without signing a currency swap agreement, the South Korean economy may fall into a crisis similar to the 1997 financial crisis.

Lee Jae-myung stated that due to disputes over the handling of investments, the agreement has not yet been converted into written text.

A South Korean government official told Reuters that they would not comment on Trump's remarks, but reiterated South Korea's position, stating that they will negotiate with the U.S. on the principle of "in line with national interests and commercial feasibility".

A senior official from the South Korean Ministry of Finance accompanying Lee Jae-myung on the visit to the U.S., when asked about Trump's comments on "upfront payments", also refused to comment.

Amid the deadlock in U.S.-South Korea trade negotiations, Trump's remarks further triggered investor anxiety. They worry that Seoul may ultimately end up with an unfair agreement, or even fail to reach an agreement.

Analysts believe that it is unlikely for the U.S. and South Korea to reach a currency swap agreement. According to them, South Korean negotiators are trying to push for most of the funds to be invested in the form of loans rather than direct investment. They also urged Washington to establish mechanisms to ensure the commercial feasibility of the relevant projects.

In addition, in early September, U.S. immigration enforcement agencies conducted a surprise inspection at a joint battery plant between Hyundai Motor and LG Energy Solution in Georgia, arresting more than 300 South Koreans, which undoubtedly added more doubts to South Korean investments in the U.S.

On September 24th local time, South Korean Prime Minister Kim Myung-sik, in an interview with Bloomberg in Seoul, said that until the visa issues of South Korean workers are resolved, South Korean investment projects in the U.S. will remain in an uncertain state. He urged the Trump administration to take action as soon as possible to calm the South Koreans who are worried in the U.S.

"If the visa issue is not resolved, substantial progress is almost impossible," Kim Myung-sik pointed out, adding that the visa issue not only affects existing projects, but also casts a shadow over the additional $3.5 billion investment agreed upon in the U.S.-South Korea trade agreement.

Kim Myung-sik mentioned that although the project has not been completely stopped or formally put on hold, a large number of workers will find it difficult to enter the U.S. before the issue is resolved. He said, "Without clear security guarantees, these workers and their families naturally do not want to go back to the U.S. again."

Photo of the scene of U.S. law enforcement raiding a South Korean factory, video screenshot

Bloomberg noted in its report that the trade agreement deadlock and the visa issue could add embarrassment to the meeting between Lee Jae-myung and Trump at the APEC Leaders' Summit in Gyeongju, South Korea next month.

On the 24th, Lee Jae-myung met with U.S. Treasury Secretary Scott Bessent during the UN General Assembly in New York. Kim Myung-sik did not reveal negotiation details, but stated that if the agreement imposes a significant financial burden on South Korea, it may require approval from the legislature.

According to Chosun Ilbo, on the 23rd, the head of the South Korean National Security Office, Wi Sang-rok, at a press conference in New York, said that despite the deadlock in negotiations, South Korea still believes that the two sides can reach a consensus. He also said that if U.S. President Trump attends the APEC in Gyeongju next month, discussions on resolving the tariff negotiation issues would proceed.

But he added, "The U.S. government has not officially announced that Trump will attend APEC."

This article is exclusive to Observer Net, and any reproduction without permission is prohibited.

Original: https://www.toutiao.com/article/7554302548723663369/

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