Kim Yong-beom, the Policy Director, stated that “most of the issues in the US-Korea negotiations have shown progress,” but some key issues remain unresolved. The primary contention lies in the investment method. The U.S. prefers an up-front and direct investment approach, while South Korea is focused on mitigating foreign exchange market impacts and financial burdens by opting for a mixed strategy of phased investments and equity participation. Additionally, authority over investment selection and profit distribution remains a concern.
The South Korean government, having held meetings even during the Chuseok holiday, has been pushing for a resolution by the second US-Korea summit during the Asia-Pacific Economic Cooperation (APEC) meetings. Although there’s optimism due to substantial progress, the negotiations are still ongoing. South Korea is emphasizing “commercial rationality” with adjustments in investment amounts, structuring of cash, loans, and guarantees, and demanding currency swaps for exchange market stability.
Despite the hurdles, there is an indication that APEC might spur a resolution. Financial stability measures, such as currency swaps, are under consideration to manage potential foreign exchange market volatility caused by the massive U.S.-bound investment package. Furthermore, negotiations are addressing how South Korea’s economic security and industry risks will be managed, as explored in a recent meeting hosted by the National Security Office.
The outcome will depend on how swiftly the remaining issues can be resolved, aiming for a Memorandum of Understanding (MOU) before the APEC Summit. Both sides are urged to find mutually beneficial agreements amid concerns over specific tariffs affecting key South Korean exports like automobiles and steel, against the backdrop of the ongoing U.S.-China trade tensions.