Gyeongju: South Korea and the United States have reached a comprehensive agreement detailing Seoul's $350 billion investment pledge, which includes a reduction in U.S. tariffs on Korean products. This announcement was made by the presidential policy chief on Wednesday.
According to Yonhap News Agency, the agreement was solidified ahead of a summit between President Lee Jae Myung of South Korea and U.S. President Donald Trump in Gyeongju. The negotiations, which spanned nearly three months, aimed to resolve discrepancies in the investment pledge details.
The investment pledge will involve $200 billion in cash installments and $150 billion earmarked for shipbuilding industry cooperation. An annual cap of $20 billion has been set to ensure that the investments align with business progress and do not disrupt the Korean foreign exchange market. Korean companies are expected to spearhead shipbuilding projects, including direct investment and loan guarantees.
Under the new terms, U.S. tariffs on Korean goods will decrease from 25 percent to 15 percent, as initially agreed in July. Additionally, pharmaceutical and lumber products will receive "most-favored nation treatment," while certain goods like airplane parts and generic pharmaceuticals, which are not produced in the U.S., will be exempt from tariffs. Tariff levels for semiconductors will match those applied to Taiwan, a key competitor of South Korea.
Both countries have agreed to incorporate "commercial rationality" in the memorandum of understanding (MOU) and to equally split profits until the investment amount is fully recovered. South Korea has also secured a safeguard clause for additional consultations if the U.S. seeks investments without proper committee review.
The agreement is expected to enhance conditions for Korean companies in the U.S. market and create a more favorable export environment compared to other nations. The specifics of the MOU will require a special law and ratification by the National Assembly for implementation, with the reduced tariffs applied retroactively from the bill's submission date.
A fact sheet outlining the trade and security components of the agreement will be released soon, as the terms of the MOU near finalization.