Kim Yongbeom: "Korea-U.S. Trade and Security MOU to Be Disclosed During National Assembly Review... Doubts to Be Resolved Soon" [Gyeongju APEC]

"Final wording virtually agreed; MOU is 25-30 pages long... Joint fact sheet is 3-4 pages"
On Secretary Lutnick's social media remarks: "What matters are the specific terms in the MOU"

Kim Yongbeom, Chief of Policy at the Presidential Office, stated that once the 25- to 30-page Memorandum of Understanding (MOU) and the 3- to 4-page joint fact sheet from the Korea-U.S. tariff negotiations are released, many of the current doubts will be largely resolved.

Yonhap News Agency

In an interview with JTBC on the afternoon of October 31, Kim predicted that the MOU, which was dramatically concluded during the Korea-U.S. summit held on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meeting in Gyeongju, would be made public during the review process when a special law is submitted to the National Assembly, as such a law would be required to implement the MOU.

Kim further explained, "The MOU is about 25 to 30 pages long, and the joint fact sheet is about three pages," adding that he was closely monitoring the final wording adjustments out of concern that the wording might change at the last minute. "In reality, the wording has been virtually agreed upon," he added.

Regarding U.S. Secretary of Commerce Howard Lutnick's remarks on social media implying that semiconductor-related issues were not included in the current negotiations, Kim stated, "What matters are the specific terms contained in the MOU and the joint fact sheet." He also commented on the timing of the final documents, saying, "It will be soon," and added, "Our current goal is to announce the investment, trade, and security sectors all at once."

On October 29, Korea and the United States dramatically reached a final agreement on a tariff negotiation centered on a $350 billion 'U.S. investment package,' resolving uncertainties. The two countries, which had previously failed to narrow differences on key issues, reached a final conclusion during the Korea-U.S. summit held at the APEC leaders’ meeting in Gyeongju.

As a result of this agreement, Korea will invest $200 billion in cash (equity) in the United States, with an annual cap of $20 billion, while the remaining $150 billion will be invested through a combination of cash (equity) and guarantees led by Korean companies as part of the so-called 'MASGA (Make American Shipbuilding Great Again)' project, a shipbuilding cooperation initiative. The profit-sharing ratio will be set at 50:50 before the principal is recovered. Korea insisted that the investment be made in installments to minimize shocks to the foreign exchange market, and the United States agreed to change the profit-sharing ratio before principal recovery from 90:10 in favor of the U.S. to 50:50 between Korea and the U.S.

Korea will maintain the $350 billion investment in the U.S.-a major sticking point-but will set an annual cap of $20 billion to mitigate the impact on the domestic foreign exchange market. The U.S., which had initially demanded a $350 billion up-front cash payment, accepted the persistent persuasion of the Korean negotiation team. The amount of foreign currency Korea can raise in a year without impacting the foreign exchange market is estimated to be between $15 billion and $20 billion. Even the annual $20 billion will be paid using a capital call method, meaning the investment will be made only upon request rather than in a lump sum. Kim explained during a briefing on the day the agreement was reached, "The $200 billion investment will not be made all at once, but rather in line with business progress, within the annual cap of $20 billion, so it is within the manageable range of our foreign exchange market." He added, "We have also established a separate basis for requesting adjustments to the timing and amount of payments if there are concerns about shocks to the foreign exchange market."

The 'MASGA' project, related to shipbuilding cooperation, will be led by Korean companies. The investment will include loans and guarantees. When introducing new shipbuilding orders, funds will be raised through long-term financing, reducing the burden on Korea's foreign exchange market and increasing the likelihood of Korean companies winning shipbuilding contracts. Kim stated, "Since the $150 billion in the shipbuilding sector will be provided as foreign direct investment (FDI), with loans and guarantees from domestic and international commercial banks, the actual burden on the foreign exchange market, including ship financing, will be very limited."