Han media: "The US has given a constructive proposal" South Korea-US tariff negotiations accelerate

To reach an agreement before the APEC Summit, South Korea and the United States are conducting final negotiations on tariffs. Policy Director of the South Korean Presidential Office Kim Yong-beom and Minister of Trade, Industry and Energy Kim Jung-gwan will depart for the US on the 16th to promote further discussions between South Korea and the US. Recently, the US has proposed a revised plan to South Korea, and it is expected that both sides will further negotiate around this plan.

The South Korean Presidential Office and the Ministry of Trade, Industry and Energy stated on the 15th that Policy Director Kim Yong-beom and Minister Kim Jung-gwan will visit the US on the 16th to discuss follow-up matters regarding the tariff negotiations. The two officials plan to go to Washington D.C., where they will meet with US Commerce Secretary Howard Lutnick. The head of the Department's International Trade Negotiations Division, Yeo Han-kyu, had already arrived in the US the day before to prepare for the formal negotiations. In addition, Vice Prime Minister and Minister of Planning and Finance Koo Woon-hwan will attend the G20 Finance Ministers and Central Bank Governors Meeting held in Washington from the 15th to the 16th local time, and will take the opportunity to meet with US Treasury Secretary Scott Bessent to discuss tariff issues.

Over the past two weeks, the US has given a "positive response" to the South Korean amendment, and has proposed a new plan based on this, leading to a noticeable change in the negotiation atmosphere. On that day, Kim Yong-beom said in an interview with "ThreePro TV" that "the US had not responded for a long time previously, but during this visit by Minister Kim Jung-gwan to the US, the US not only gave a constructive comment, but also proposed a constructive alternative plan." Previously, Minister Kim Jung-gwan had held consultations with his counterpart, Lutnick, during the Mid-Autumn Festival holiday on the 4th of this month.

The biggest difference currently lies in the $3.5 billion (approximately 498 trillion won) investment plan for the US. To encourage the US to lower tariffs, South Korea has committed to this investment, but the two sides have not yet reached consensus on three key issues, including the investment structure (cash and guarantee ratio), an unlimited currency swap mechanism, and the investment allocation (commercial reasonableness).

The US hopes that South Korea will follow Japan's example and adopt a "blank check" style plan, investing $3.5 billion in cash. However, South Korea, considering foreign exchange market stability and fiscal burden, argues that direct equity investment should be minimized, and the investment structure should be built mainly on guarantees and loans. At the same time, if the US requires an increase in equity investment, the South Korean government emphasizes that it must be conditional upon establishing an "safety valve" type unlimited currency swap mechanism (i.e., a bilateral currency exchange agreement).

Kim Yong-beom pointed out, "Typical investment projects establish a corporate entity, make capital investments, and are accompanied by loans and guarantees. We originally thought this cooperation would follow this conventional model," "In early August, we received the US memorandum of understanding (MOU), found its form different from expectations, and immediately raised questions, but the US took a negative stance on loan and guarantee structures."

He further stated, "If the US initial draft were to proceed, South Korea would hardly be able to bear it, and there was even intense confrontation at the time," "However, the US later understood our position and proposed an improved plan. In my view, this progress has a constructive significance."

Currently, the specific content of the US revised plan has not been made public. The key issue of this negotiation is whether the US will adopt South Korea's main requests. Kim Yong-beom emphasized, "The $3.5 billion cannot be invested all at once, and must be used for projects that can truly promote the revitalization of American manufacturing."

It is expected that the specific compromise plan will be finalized during the APEC Summit held in Gyeongju at the end of this month. Kim Yong-beom explained, "Although there is no clear deadline, considering the limited opportunities for meetings between the leaders of the two countries, APEC is actually our main goal of effort." A diplomatic source also revealed, "The special dispatch of the Policy Director to the US aims to stabilize the negotiation framework before the summit," "It is expected that this visit will lay the framework of the agreement, and specific wording and detail adjustments may be left for subsequent discussions."

Analysts believe that if the US makes some concessions on the investment structure or guarantee conditions in the revised plan, the possibility of South Korea and the US reaching an agreement will further increase in the current context of escalating Sino-US tensions. Professor Lee Jae-min (音) of the College of Law at Seoul National University pointed out, "The US may have realized that a $3.5 billion cash investment is not feasible in reality, so it has proposed a more viable revised plan," "After three to four months of negotiation, both sides are showing signs of fatigue, which has actually increased the possibility of US compromise. Compared to September, the negotiation environment in October has improved somewhat."

Jeong Sang-jik (音), director of the Institute of International Trade and Commerce at the Korea Trade Association, also said, "Although the intensifying Sino-US conflict has increased the pressure on South Korea, from the US perspective, the necessity of reaching an agreement with South Korea as soon as possible has also risen," "With the expanding negotiation front with China, the US is likely to speed up the negotiations with South Korea to strengthen cooperation in the supply chain field."

Source: JoongAng Ilbo

Original: www.toutiao.com/article/1846186824113162/

Statement: This article represents the views of the author himself.