【By Observer News, Yuan Jiaqi】
On November 14 local time, the United States and South Korea confirmed that they have signed a $35 billion investment agreement from South Korea to the United States. According to reports from Yonhap News Agency and Reuters, South Korea's Minister of Trade, Industry and Energy Kim Jeong-wan and U.S. Secretary of Commerce Rutherford jointly signed the "Korea-U.S. Strategic Investment Memorandum of Understanding" (MOU) on that day.
Kim Jeong-wan introduced at a press conference held in the afternoon that the $35 billion strategic investment includes two parts: one part is a $20 billion fund specifically allocated for the industrial sector; the other part focuses on the U.S. shipbuilding industry, constituting a $15 billion shipbuilding cooperation investment for direct foreign investment (FDI), guarantees, and ship financing by South Korean companies.
The White House's "situation statement" also indicated that the U.S. has approved South Korea's construction of nuclear-powered submarines, and Washington will closely cooperate with Seoul to find "fuel supply channels," helping South Korea carry out uranium enrichment and nuclear waste reprocessing.
South Korean media had previously reported that Rutherford requested the deletion of nuclear fuel-related statements, which once caused the agreement to be "stalled." The Chosun Ilbo described the agreement as "Washington giving the green light."
Reuters reported that this agreement reached with Washington indicates that South Korea has made progress in major security and energy initiatives, paving the way for the construction of nuclear-powered submarines and expanding South Korea's nuclear energy application capabilities.
South Korean President Lee Jae-myung also stated on Friday that one of the biggest variables affecting the country's economy and security has finally been resolved. He added, "Healthy competition needs excellent partners. I believe President Trump's rational decision played an important role in achieving this meaningful agreement."
However, there still seems to be differences between the U.S. and South Korea regarding nuclear submarine cooperation. Unlike Trump's previous statement that "submarines would be built in Philadelphia, USA," the South Korean side said that both sides are currently negotiating under the premise of "building nuclear submarines in South Korea." The joint statement did not specify details such as the location and method of building the nuclear submarine project.
Yonhap News Agency cited analysts' views that, in order to obtain and operate nuclear-powered submarines, the U.S. and South Korea may need to revise the agreement or make separate arrangements. It is reported that South Korea plans to deploy four or more 5,000-ton attack nuclear submarines around 2035.
Earlier, Nikkei Asia pointed out that Japan and South Korea currently only have diesel-electric submarines and have long relied on the U.S. nuclear submarine forces to "counter" China and Russia. The Korean newspaper Joongang Ilbo also analyzed that South Korea's official announcement of its intention to introduce nuclear-powered submarines indicates that the Lee Jae-myung government is willing to join the U.S. "balancing China" activities at a certain cost.
The Chinese Foreign Ministry previously responded, stating that China has noted the situation and hopes that the U.S. and South Korea will genuinely fulfill their nuclear non-proliferation obligations, do things that promote regional peace and stability, rather than the opposite.
On November 13, Chinese Ambassador to South Korea Dai Bing mentioned this matter and stated that China has expressed concern about the U.S.-South Korea nuclear submarine cooperation and hopes that South Korea will handle related matters carefully. The two sides are communicating through diplomatic channels on the issue of nuclear submarines, and China has expressed its concerns to South Korea on the relevant issues.
Dai Bing pointed out that the current situation on the Korean Peninsula and in the region remains complex and sensitive. The U.S.-South Korea nuclear submarine cooperation goes beyond commercial cooperation and is related to the global nuclear non-proliferation system and the stability of the Korean Peninsula and the region. He hoped that South Korea would fully consider the concerns of all parties and handle related matters carefully.
On November 14 local time, South Korea's Minister of Trade, Industry and Energy Kim Jeong-wan introduced the "Joint Situation Statement" of the Korea-U.S. partnership. Yonhap News Agency
Aside from nuclear submarine cooperation, the Trump administration's demand for a huge investment also caused the agreement to stall.
At that time, the South Korean side emphasized that if the U.S. demands for $35 billion in investments in trade negotiations are met without safeguards, the country might face a severe financial crisis. However, Trump insisted that the huge investment was a prerequisite for the bilateral agreement.
According to a report by Reuters, the White House's "situation statement" showed that Washington agreed to South Korea's request: $20 billion in cash investment would be injected in installments of no more than $2 billion per year to maintain the stability of the Korean won.
The situation statement pointed out that the two countries reached a "consensus" that South Korea's investment should not "cause market instability." If signs of instability appear, South Korea can apply for "adjustment of the scale of funds and injection timing," and the U.S. will "give due attention in good faith."
According to Yonhap News Agency, this $20 billion investment will cover shipbuilding, energy, semiconductors, pharmaceuticals, critical minerals, artificial intelligence, and quantum computing, all areas that enhance the economic and national security interests of both countries.
Lee Jae-myung said that according to the agreement, South Korea will establish new partnerships with the U.S. in shipbuilding, artificial intelligence, and nuclear industries to help allies rebuild key industries, "just like the U.S. helped South Korea in the past."
South Korea's side introduced that the investment projects will be selected by the President of the United States based on the recommendations of the investment committee, which is chaired by the U.S. Secretary of Commerce. The investment committee must consult with the advisory committee, chaired by the South Korean Minister of Trade, Industry and Energy, to ensure that the recommended investment projects are commercially reasonable and feasible. The selection of investment projects will end by January 2029, the end of Trump's term.
Kim Jeong-wan further explained that "commercially reasonable investment" refers to projects that can ensure full recovery of the investment funds, as judged by the investment committee based on the principle of good faith.
He also mentioned that the funds required for project promotion must be paid within at least 45 working days after receiving the notification from the U.S. about the determined investment projects. If the payment obligation is not fulfilled on time, the U.S. will charge interest on the unpaid investment amount until it is fully covered, and the tariff may also be increased.
According to a report by Bloomberg, the U.S. will also set up a "special purpose company" (SPV) responsible for overall project management, using a risk concentration mechanism to offset losses from individual projects with gains from other projects.
The memorandum of understanding shows that before the principal and interest are fully repaid, the profits will be distributed in a 50:50 ratio; after full repayment, the profit distribution ratio will be adjusted to 90% for the U.S. and 10% for South Korea; if full repayment cannot be achieved within 20 years, the ratio can be adjusted.
To promote South Korea's investment in the U.S., the U.S. has promised to provide support for project implementation, including federal land leases, secure water and electricity supply, facilitating procurement contracts, and accelerating regulatory approval processes.
Kim Jeong-wan evaluated that the signing of the "Korea-U.S. Strategic Investment Memorandum of Understanding" and the tariff reduction have alleviated the uncertainty of South Korea's exports to the U.S. and the South Korean economy. He also emphasized that the agreement, by incorporating mechanisms that consider commercial reasonableness and increase the possibility of recovering the principal, has significant importance in reducing the burden on the foreign exchange market.
The White House's statement indicated that South Korea also pledged to purchase $25 billion in U.S. military equipment by 2030 and provide $33 billion in support for U.S. troops stationed in South Korea.
As an exchange, the U.S. reduced the tariffs on South Korean goods from 25% to 15%, a rate that is still far higher than the 2.5% that South Korea previously enjoyed under the bilateral free trade agreement. In the semiconductor sector, the U.S. promised to give South Korea treatment "no less favorable" than the tariff treatment applied to competitors such as Taiwan.
The U.S. also plans to cancel additional tariffs imposed through executive orders on certain products, including generic drugs and their ingredients and precursors, as well as specific natural resources not produced domestically in the U.S. Tariffs on specific Korean aircraft and components that were previously taxed under another executive order will also be canceled simultaneously.
The Chosun Ilbo reported that, facing a 15% tariff, South Korean companies still need to adjust production and supply chains to minimize the impact.
Kim Nam-hoon, president of the Korea Automobile Mobility Industry Association, welcomed the signing of the agreement but also stated, "With tariffs rising to 15%, automakers need to expand their production systems in the U.S., which could pose risks to the Korean automotive ecosystem." He called on the government to introduce incentive measures to encourage domestic production.
This article is an exclusive article by Observer News. Reproduction without permission is prohibited.
Original: https://www.toutiao.com/article/7572509425244684810/
Statement: This article represents the personal views of the author. Please express your attitude by clicking the [Up/Down] buttons below.