Office of the President: "$20 Billion Annual Cap on US Fund Cash Investment, Tariff Cuts Targeted for November 1" [Gyeongju APEC]

Kim Yongbeom, Chief of Policy Office, briefs on the 29th
"Final Agreement Reached on Details of Tariff Negotiations"

Kim Yongbeom, Chief of Policy Office, is briefing on the Korea-US summit at the APEC Media Center in Gyeongju, Gyeongbuk on the 29th. Photo by Yonhap News

The Office of the President announced on October 29 that the final agreement had been reached on the detailed terms of the Korea-US trade and tariff negotiations. While maintaining the previously discussed $350 billion investment in the United States, the two sides agreed to set an annual cap of $20 billion to mitigate shocks to the domestic foreign exchange market.

Kim Yongbeom, Chief of Policy Office at the Office of the President, stated during a briefing at the International Media Center in Gyeongju, Gyeongbuk, "Korea and the United States reached a final agreement on the details of the tariff negotiations on October 29."

Kim explained, "Tariffs on automobiles and parts will be reduced to 15%, and reciprocal tariffs will be maintained at around 15%." He added, "Tariffs on semiconductors will be adjusted to ensure they are not less favorable than those applied to our competitor, Taiwan." He further noted, "Some items such as pharmaceuticals and lumber will receive Most Favored Nation status, and certain aircraft parts and pharmaceuticals will be converted to duty-free status." He also stated, "The principle of commercial rationality will be reflected in the memorandum of understanding (MOU) by specifying mechanisms for the recovery of principal from US investments."

The $350 billion investment comprises $200 billion in cash investment and $150 billion related to cooperation in the shipbuilding industry. However, the $200 billion cash investment will be subject to an annual investment cap of $20 billion. Kim explained, "The $200 billion investment will not be made all at once, but rather in increments of up to $20 billion per year, depending on the progress of the projects, which keeps the impact within the manageable range for our foreign exchange market."

Investments related to shipbuilding cooperation will be led by Korean companies. These investments will include loans and guarantees. Kim explained that when introducing new shipbuilding projects, long-term financing will be used to raise funds, thereby reducing the burden on the domestic foreign exchange market while also increasing the likelihood of Korean companies winning shipbuilding orders.

The tariff reductions will take effect on the first day of the month in which the relevant legislation is submitted to the National Assembly. Kim said, "We plan to submit the bill to the National Assembly by mid-November," adding, "If the two countries reach an agreement, the tariff reduction will be retroactively applied from November 1."