"US Response Within Expectations... A Very Good Start to Talks" [Q&A]

Full Briefing on Korea-US 2+2 Trade Consultations
Attended by Deputy Prime Minister Choi Sangmok and Minister Ahn Deokgeun
Overcoming Tariffs with the "July Package"
"Framework for Future Consultations Established This Time"

At the Korea-US 2+2 trade consultations held in Washington D.C. on the 24th (local time), the government announced its intention to prepare a "July Package" by July 8, the deadline for the mutual tariff suspension. The government aims to clearly define the scope and framework of negotiations regarding U.S. demands so that the imposed tariffs can be abolished.

The government stated, "The U.S. responded within the scope we anticipated," and described the outcome as "a very good start," positively evaluating the consultation results. It also clarified that there were no discussions on U.S. defense cost-sharing demands or revisions to the Korea-US Free Trade Agreement (FTA) during these talks. The government plans to begin working-level consultations next week and hold high-level talks with the U.S. in Korea next month.

Choi Sangmok, Deputy Prime Minister and Minister of Economy and Finance, and Ahn Dukgeun, Minister of Trade, Industry and Energy, held a joint briefing on the Korea-US 2+2 trade consultations on the 24th (local time) at the Korean Embassy in Washington D.C., USA. Ministry of Economy and Finance

The following is a Q&A with Deputy Prime Minister Choi and Minister Ahn.

? The term "July Package" stands out. Was this requested? Has the other side agreed to it?

▲Ahn: There are various non-tariff issues, digital sector matters, and many issues raised during our bilateral consultations. By July 8, we are to determine the scope of issues to be discussed.It was agreed that the working group to be formed during next week's working-level talks will finalize this.

? Did both sides agree to reach an agreement after the presidential election?

▲Ahn: The 90-day mutual tariff suspension period ends on July 8. The goal is to reach an agreement by then, which is what we refer to as the July Package.

? You mentioned you would not rush. Is it possible to reach an agreement before the presidential election?

▲Ahn: It depends on the issue, but the entire package must be agreed upon. Even if one or two issues are settled early, it is difficult to predict in advance how this will affect the tariffs.

? What about currency and exchange rate policy?

▲Choi: There were no specific discussions. The two countries' finance ministries and foreign exchange authorities have always closely shared information and held discussions. In this context, it was decided that the finance ministries would hold separate working-level talks specifically on exchange rate policy. We will explain the concrete policy once results are available.

? Before today's briefing, U.S. Treasury Secretary Scott Besant made several remarks. He said that an understanding could be reached next week, technical conditions would be discussed, and that they brought their "A game"?their best offer. While details may be limited, the Korean public may wonder what kind of proposals prompted such a reaction. Can you explain the context of these U.S. comments, even if you can't share specifics?

▲Ahn: We believe that the consensus expressed this time was regarding the vision for cooperation in the shipbuilding industry. As has been widely reported, for Alaska LNG, we explained the on-site due diligence. There is no particular reason for us to disclose specifics. Regarding shipbuilding cooperation, we explained our companies' large-scale investments, the vision for joint workforce development, and technology cooperation. These matched well with the U.S. administration's desire to strengthen shipbuilding capabilities.

? According to foreign media, the U.S. is pushing for a broad provisional agreement with Japan and India while delaying detailed schedules. Has the U.S. communicated this? If the U.S. makes such provisional agreements with Japan and India, should Korea align itself? Also, economic security was mentioned as a topic?does this relate to China?

▲Ahn: There was no special mention of provisional agreements today. It was confirmed that technical consultations will begin next week. A working group will be formed to determine the agenda, and substantive work will start next week. As for economic security, the content to be included can only be determined after technical consultations begin. It is too early to speculate.

▲Choi: As we understand it, today's meeting established the framework for future consultations. The scope of discussions will focus on four key areas. Exchange rate matters will be handled by the finance ministries, while the rest will be addressed by working groups formed between the Ministry of Trade, Industry and Energy and the U.S. Trade Representative (USTR). Jamieson Greer, the USTR representative, will visit Korea in mid-May, and a high-level interim review will take place then. Since mutual tariffs are suspended until July 8, that date is the target deadline for discussions. This is our understanding of the overall consultation framework.

Choi Sangmok, Deputy Prime Minister and Minister of Economy and Finance, and Ahn Dukgeun, Minister of Trade, Industry and Energy, held a joint briefing on the Korea-US 2+2 trade consultations on the 24th (local time) at the Korean Embassy in Washington D.C., USA. Ministry of Economy and Finance

? In Korea, trade negotiations are often linked to political schedules. Did your counterparts mention this? What is the U.S. view?

▲Choi: The U.S. made no mention of this. I explained that Korea has its own political schedule, there are matters within the executive's authority, and some require legislative approval. The U.S. side agreed that such considerations are necessary during the consultation process. The USTR will issue a press release later, which will likely have more precise wording than Secretary Besant's remarks. That may be helpful as a reference.

? Was there any mention or concern from the U.S. side regarding exchange rates or currency manipulation?

▲Choi: There was no such content at all. Secretary Besant suggested that exchange rate matters be discussed separately between the two finance ministries.

? When you mentioned the political schedule, did you mean that the next administration should conclude the negotiations?

▲Choi: That is not the case. It is not possible to say that trade consultations between the two countries should be handled that way. I simply reminded them of the political schedule and mentioned that it should be taken into account.

? From your comments, it seems you intend to proceed carefully rather than hastily. Acting President and Prime Minister Han Ducksoo seems to have a different stance. Did he emphasize anything before these talks?

▲Choi: There was no separate message from him.

? You said you discussed the consultation framework. Was there any mention, even slight, of defense cost-sharing? The U.S. agreed that if we make efforts on mutual tariffs, the process must go through both the legislature and executive. Does this mean the suspension period will be extended?

▲Choi: First, there was absolutely no mention of defense cost-sharing today. Second, it is too speculative to say more. Since we only discussed the framework, both sides understood this as a reference to major considerations.

? You mentioned that the U.S. was pleased with the discussion on the shipbuilding industry. What exactly does that mean?

▲Ahn: The U.S. described their position as "A game"?their best offer. I cannot confirm if this was specifically because of the shipbuilding industry. Realistically, it is difficult to achieve a completely balanced trade account within a four-year term. Considering that, the area with the greatest gap is likely shipbuilding cooperation. Even in our internal preparations, we saw this as the most important area for bilateral cooperation. This is a representative "win-win" area. We explained these points, and the response was very positive.

? This was your first meeting, and while it is reassuring that the talks went well, there are also concerns. Were the U.S. demands and attitudes during the talks as expected, or were there surprises? Please give an overall assessment.

▲Choi: We understand that the U.S. responded within the scope we anticipated. There were no unexpected requests or wishes from their side. Today's goal was to set the framework for consultations. Defining the scope of discussions was the most important objective. Within that scope, the U.S. engaged accordingly. I do not recall any specific requests or issues raised within the agreed scope.

▲Ahn: I believe we had a very good start today. The trust built through my previous two visits to the Department of Commerce and USTR was an asset. We presented a vision for industrial cooperation, and there is significant potential for cooperation between the two countries. For this to be realized, tariff issues must be resolved quickly. Secretary Besant's positive evaluation suggests a good start. We raised non-tariff issues, including those in the digital industry, and are discussing how to address them with the USTR through a working group. Working-level consultations will begin as early as next week.

? Regarding automobile tariffs, did you get the sense that the "July Package" could provide room for reduction? What did you explain about the shipbuilding vision?

▲Ahn: It is difficult to explain the shipbuilding vision in detail. Our companies are making large-scale investments. HD Hyundai recently signed an MOU, and there are various other investment plans. We explained our companies' active investment in the U.S., the need for workforce development to strengthen shipbuilding capabilities, and how we might proceed. We presented a vision to systematically cooperate on technology, workforce training, and investment, which seems to match the U.S. needs well. Regarding automobiles, it is difficult to predict. Automobiles and parts are key in Korea-U.S. trade relations. We emphasized their importance and our active investment, and requested attention to this area. The USTR is well aware of this and intends to handle it carefully. However, decisions on automobile tariffs will ultimately be made by President Donald Trump, but at the working level, we will do our utmost.

Choi Sangmok, Deputy Prime Minister for Economy and Minister of Economy and Finance, attended the "Korea-US 2+2 Trade Consultations" held at the U.S. Department of the Treasury in Washington D.C. on the 24th (local time) along with Ahn Deokgeun, Minister of Trade, Industry and Energy. They took a photo with Janet Yellen, U.S. Secretary of the Treasury, and Katherine Tai, U.S. Trade Representative. Photo by Ministry of Economy and Finance

? The New York Times published an article today about Alaska LNG, reporting that the U.S. is pressuring Korea and Japan to invest and to sign a letter of intent at a relevant committee on June 2. Was this discussed?

▲Ahn: For the Alaska issue, on-site due diligence is needed to more accurately assess the situation. We will know how the discussions will proceed after the inspection team returns. I am aware of the June 2 event, but this is the first I have heard of any pressure to sign.

? What specific non-tariff barriers did the U.S. raise? Were there any issues related to digital companies or platform laws? Was there any discussion of FTA renegotiation?

▲Ahn: There was no mention of FTA renegotiation. If renegotiations were to occur, it could take a very long time. Therefore, we believe such topics are being avoided as much as possible. No specific issues were singled out, but digital matters were discussed.

? Was there any mention of rice or beef during the consultations?

▲Ahn: No, there was not.

? Did the U.S. mention anything about China? What do you think about the view that Korea and Japan are in a strategic competition?

▲Choi: There was no mention of China at all. It is not appropriate to comment on the schedules of other countries. There was no mention of China or Japan today.

? Is there any possibility of consultations or discussions with Japan?

▲Ahn: When discussing LNG, it is difficult to establish business feasibility on our own. We have consistently suggested that major LNG-consuming countries such as Japan, Taiwan, and Vietnam form a consultative body. That was the extent of the discussion.

? Regarding LNG, since this is a long-term project initiated by the Trump administration, is the Korean government considering its continuity if the U.S. administration changes?

▲Ahn: We are comprehensively considering all factors related to the Alaska LNG project, including the possibility of a change in government. As you know, it is not easy to establish business feasibility for the Alaska project, but if various Asian countries generate sufficient demand and the project succeeds, Alaska LNG could become a very important energy source and energy security asset for Korea. We are reviewing it carefully. Even if it becomes feasible, since Korea relies entirely on LNG imports, the import schedule must align. If we proceed based on expected feasibility and it does not work out, it could cause significant national problems, so we must examine every aspect. We will make a decision after thoroughly considering all factors and confirming the feasibility, timing, and scale.

? Deputy Prime Minister, you mentioned the political schedule and the possibility of National Assembly cooperation. Will the July Package require legislative or parliamentary approval? Will defense cost-sharing be included?

▲Choi: Even if improvements to non-tariff issues are concluded, some changes may require revisions to enforcement ordinances or laws, which would need prior approval from the National Assembly. I have already briefed the National Assembly on the Korea-U.S. tariff consultations. Now that the talks are over, I will report back. It is desirable to communicate and gain parliamentary support throughout this process, and that is our plan.

? Some view the Trump administration's prior consultations with allies as a strategy to isolate China. Do you see active participation in this strategy as leverage for extending the tariff suspension? Also, the U.S. Department of Commerce was not present at today’s consultations. How did you proceed?

▲Ahn: The Secretary of Commerce did not attend this time. Regarding economic security issues with China, Korea has made significant legal and institutional improvements over the past two to three years in areas such as export controls and technology security. Due to serious technology leaks, we have strengthened regulations, but we do not have export or technology controls or economic security measures targeting specific countries. How to proceed with such discussions in the future will be determined through further consultations.

On the 24th (local time), the Korea-US 2+2 trade consultation took place at the U.S. Department of the Treasury building in Washington D.C. Photo by Ministry of Economy and Finance

? After negotiating with the U.S., Japan received a cap with "MAGA" written on it, which caused controversy. Were there any such gifts today?

▲Choi: We exchanged basic commemorative coins as gifts.

? President Trump said it would be advantageous to conclude negotiations quickly. Do you also believe it is better to reach a conclusion soon?

▲Choi: Secretary Besant meant that the consultations started promptly. July 8 is the deadline for the suspension, so a decision must be made then on whether to extend, abolish, or reduce the tariffs. Therefore, July 8 is the most natural target for the consultation schedule.

? The U.S. asked Korea to block indirect exports to China, and Minister Ahn explained that Korea is already doing so. Did the U.S. accept this explanation, or did they ask for more?

▲Ahn: We explained with data. For example, when steel is exported, the origin is verified, and the data show that nothing is being re-exported from China. Unlike during Trump's first term, Korea now has a trade deficit with China, and anti-dumping duties of over 30% are being imposed. We explained these points, and the USTR seems to understand well.

? Is the "July Package" a negotiation or a consultation?

▲Ahn: We are using the term "consultation." To allay public concerns, we are not invoking the Trade Procedure Act or including FTA revisions, so we refer to it as a consultation.

? Regarding the completion date, does mentioning July 8 mean you intend to finish within that period? Is it your basic position that the next administration should conclude it?

▲Choi: That is how I answered in the National Assembly. However, today we are talking about the outcome of Korea-U.S. consultations. There is a consensus to use July 8 as the timeline for discussions.

? Was your answer in the National Assembly your personal view?

▲Choi: What is clear is that we will proceed calmly with the national interest as the top priority. Since consultations involve both sides, if some elements are in the national interest, they can proceed first, but since the overall package concerns the extension or abolition of the tariff suspension, the target date is July 8.

? Is it possible to reach partial agreements?

▲Choi: We use the term "package" because it should be concluded as a whole. Even if there are partial agreements, that does not mean the entire package is settled.