Discussion Affirms the Disagreements Between Korea and Japan Amidst Slow Progress in $350 Billion US Investment Negotiations
South Korea's proposed $350 billion investment in the United States, equivalent to over 80% of Korea's foreign reserves, is currently facing obstacles. The deal, aimed at reducing tariffs from 25% to 15% on South Korean cars, remains stalled due to disagreements over key details.
Last month, Trade Minister Yeo Han-koo of South Korea returned from follow-up talks in Washington regarding this multibillion-dollar investment deal. During these negotiations, Minister Yeo urged the US to resolve visa issues related to the raid at the Hyundai Motor-LG Energy Solution battery plant in Georgia, where more than 300 Korean workers were detained and held for a week before returning home.
Industry Minister Kim Jung-kwan of South Korea also met with US Commerce Secretary Howard Lutnick last week, discussing the investment deal. However, the specific details of the negotiations, such as the structure of the investment deal and how returns will be shared, remain undisclosed.
Experts suggest that raising such a large amount could potentially lead to a dollar shortage and financial instability. Seoul, therefore, insists on using alternatives to the financing scheme for the investment, citing concerns about foreign exchange market stability.
On the other hand, Washington wants a higher proportion of direct investment and control over project selection. These major differences have yet to be resolved, causing the deal to be stalled.
Despite these challenges, the deal was broadly reaffirmed during a summit between President Lee Jae Myung of South Korea and US President Donald Trump last month. The US-Japan deal, on the other hand, has taken effect, with profits initially split equally but shifting to 90% for the US and 10% for Tokyo once Japan recoups its investment.
Under this deal, South Korean cars still face 25% tariffs, while the 15% tariffs on Japanese automobiles have taken effect. Minister Yeo Han-koo recognizes the urgency of the auto tariff issue and is making efforts to resolve it quickly.
As negotiations continue, both countries are expected to work towards finding a mutually beneficial solution to the investment deal, ensuring stability in the global economy and strengthening the trade relationship between South Korea and the United States.
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