Seoul: Industry Minister Kim Jung-kwan and U.S. Commerce Secretary Howard Lutnick have held two rounds of virtual discussions since last weekend, as the two nations attempt to reconcile differences regarding the execution of Seoul’s $350 billion investment commitment under a trade framework agreed upon in July.
According to Yonhap News Agency, since returning from Washington last week, Minister Kim has continued negotiations with Secretary Lutnick to find a compromise. However, sources familiar with the talks suggest that the chances of a significant breakthrough remain limited.
The trade framework, established in late July, saw Seoul pledge a $350 billion investment in the United States in exchange for Washington’s agreement to reduce its “reciprocal” tariff and sector-specific duty on South Korean automobiles from 25 percent to 15 percent. Despite this agreement, the deal has not yet been implemented due to ongoing negotiations over several contentious issues, including the funding mechanism for the investment package.
Initially, South Korea planned to contribute only a small fraction, less than 5 percent, in direct cash investment, with the majority of the commitment backed by guarantees. Conversely, the United States reportedly favored a more substantial cash investment, referencing past agreements such as the one with Tokyo.
As discussions have progressed, both parties are reportedly seeking a compromise to resolve the deadlock. Despite these efforts, Washington continues to request a cash investment of $25 billion annually over eight years, totaling $200 billion. In response, South Korea has offered a cash investment of $7 billion per year over a decade, amounting to $70 billion in total.