[Why&Next] Countdown for Korea-U.S. Tariff Talks... All-Out High-Level Government Push in Washington

South Korea-U.S. Tariff Talks Enter Final Coordination
Senior Officials Koo Yooncheol, Kim Jeonggwan, and Yeo Hankoo Visit Washington in Succession
Contact with White House Office of Management and Budget (OMB) Underway
Negotiations Move to Final

Yonhap News

The South Korea-U.S. customs negotiations have effectively entered the final coordination stage. On October 15 (local time), Deputy Prime Minister for Economic Affairs Koo Yooncheol arrived in Washington, D.C. and began contacts with the U.S. Department of the Treasury. On October 16, Presidential Chief of Staff for Policy Kim Yongbeom and Minister of Trade, Industry and Energy Kim Jeonggwan will join him. Trade Minister Yeo Hankoo had already arrived in the U.S. as part of an advance team and has reportedly completed preparations for follow-up discussions. The government is now engaged in what is being described as an "all-out effort" to reach an agreement before the APEC (Asia-Pacific Economic Cooperation) Summit in Gyeongju at the end of October.

According to a government official, the South Korean delegation will visit the Office of Management and Budget (OMB) at the White House on the afternoon of October 16 (local time). This has strengthened the view that the negotiations have entered the "finalization of wording and procedural review" stage. The OMB is a key agency overseeing federal budget and regulatory reviews, responsible for reviewing the text and administrative procedures of major fiscal and investment agreements. The meeting with the OMB was reportedly proposed by the Ministry of Trade, Industry and Energy, and there is a consensus inside and outside the government that "this is the stage to synchronize the details of the MOU wording between South Korea and the U.S. with the OMB."

Speaking to reporters before departing for the follow-up customs negotiations in the U.S., Chief of Staff Kim said, "Our ministers have traveled to Washington, D.C., and since there are multiple discussions underway, we thought it would be good to accelerate the negotiations, which is why I am heading to the U.S. I am optimistic about the follow-up negotiations on the South Korea-U.S. customs deal."

Regarding U.S. Treasury Secretary Scott Besant's remarks that the customs negotiations are in their final stage, he said, "Until now, the relevant U.S. departments did not appear to be communicating closely, but recently, the Department of Commerce has shown a very close level of communication."

Regarding President Trump's comments about "South Korea's $350 billion upfront investment," he explained, "This is one of the various issues being discussed at the negotiating table."

This visit to the U.S. has two main focuses. First, South Korea will present a finalized revision of the implementation structure for the so-called "$350 billion investment package" to the U.S. side, and second, the two sides will finalize the scope and timing of the mutually-linked tariff reduction (25%). Upon his arrival at the airport, Deputy Prime Minister Koo stated, "The negotiations are being coordinated at a rapid pace." On October 15, U.S. Treasury Secretary Scott Besant signaled an imminent agreement, saying, "We are reviewing the details and expect something within 10 days."

The nature and composition of the investment package have also reached a turning point. Initially, the U.S. side demanded a high proportion of cash direct investment, but over the past two weeks, the South Korean side's revised proposal to include non-cash instruments such as guarantees and loans has made "significant progress," according to a briefing by Chief of Staff Kim Yongbeom. Secretary Besant also mentioned, "The differences can be resolved." Analysts believe that for South Korea, with its relatively shallow foreign exchange market, to avoid a lump-sum cash injection while still meeting the U.S. demand for "marketability and sustainability," the use of non-cash instruments, phased execution, and conditional triggers will be key.

Deputy Prime Minister Koo had previously stated during a National Assembly audit, "A lump-sum cash investment is difficult to manage. We have explained our foreign exchange situation to the U.S. side." This is interpreted as an intention to minimize the impact on the foreign exchange market from the investment execution and to disperse risk through a multi-layered financing structure involving the private sector, public sector, and policy finance.

Detailed adjustments in the customs section are being made simultaneously in four areas: items, reduction rates, implementation timing, and exceptions. For key industries such as steel, automobiles, and semiconductors, the extent of tariff reduction and the timing of implementation may differ by item, and aligning the "exchange ratio" with U.S. non-tariff barriers (standards, certifications, procurement, taxation) remains a final variable.

Nevertheless, signs of an "imminent agreement" are strong. The simultaneous visit of Kim Yongbeom, Kim Jeonggwan, and Yeo Hankoo to the U.S., and the "triangular coordination" with the Treasury, Commerce Department, and OMB, represent an all-hands-on-deck approach rarely seen in trade negotiations. However, while the government has set reaching an agreement before the APEC Summit as its official goal, it continues to emphasize that "substance over deadline" remains the guiding principle.

The tasks after the agreement are clear. First is the roadmap for investment execution. Financial and technical clauses such as amount, instruments, and provisions for reduction or increase must be clarified so that companies and policy finance institutions can actually move funds. Another task is managing market impact. Safeguards such as phased execution, hedging, and currency swaps must be designed to ensure that the positive effects of the "investment-tariff" exchange are fully realized. Minimizing the impact of political scheduling is also crucial. As the spotlight will be on summit diplomacy events around APEC, the effectiveness of the agreement text and annexes must take precedence over political staging.

Minister Kim Jeonggwan, when asked about the possibility of concluding the customs negotiations at APEC, said, "We are not making any predictions about a specific time frame. APEC is an opportunity for the two leaders to meet, and while there is a consensus among the negotiating teams to make use of this opportunity, it is much more important to act in line with the national interest and the understanding of the people."