-Seoul 'doing its best' to resolve US tariff talks by July 8

-Lee open to new Korea-Japan pact echoing Kim-Obuchi declaration

-Lee warns of more curbs on housing speculation

-President reaffirms push for prosecutorial reform

President Lee Jae Myung said Thursday that efforts to improve relations with North Korea must be grounded in close cooperation between Seoul and Washington, noting that inter-Korean dialogue remains difficult to pursue for now.

"The relationship between the two Koreas should improve based on the joint effort and cooperation between South Korea and the United States," Lee said in a news conference held at Cheong Wa Dae, which was formerly used as the presidential compound.

"But at this moment, the (two Koreas) have turned hostile to each other and distrust between the two intensified, so it won't be easy to resume the dialogue promptly."

At the first press conference as the president 30 days after his inauguration, Lee also said in his remarks that the ironclad alliance between South Korea and the US, and the three-way cooperation between South Korea, the US and Japan will be key to restoring peace on the Korean Peninsula, amid North Korea's continued nuclear provocations and recent military cooperation with Russia.

Based on the cooperation with its partners on regional security, the 60-year-old said that severing inter-Korean talks would be the last option for his administration.

"In fact, diplomacy never even stopped during wartime," Lee said,"It would be a foolish decision to completely cut off communication (with North Korea)."

“If our goal is not an elimination of (North Korea), we may continue to be mutually beneficial to each other within a safety zone, and this is what dialogue, conversation, cooperation and coexistence is all about," Lee also said, adding that his administration hints at renaming the Ministry of Unification in order not to intimidate North Korea.

Lee also stressed that his administration's moves to halt loudspeakers along the border with North Korea paid off, but added he did not expect Pyongyang to respond immediately.

“I thought (North Korea) would react to (our move) for sure. But (North Korea)'s response was quicker than I thought. It was somehow beyond my expectations,” Lee said.

Lee, on the other hand, painted a somewhat bleak picture of whether the ongoing tariff negotiations with the United States could be settled before the deadline for the"reciprocal" tariff suspension suggested by US President Donald Trump. Failure to reach an agreement could leave most of South Korea's goods exported to the US subject to a steep tariff hike.

“I cannot confirm whether the (tariff negotiations between South Korea and the US) could reach a compromise before the July 8 deadline," Lee said.

His remarks came on the same day that news broke out that US Secretary of State Marco Rubio's planned visit to Seoul next week had been canceled.

"I’m trying to do our best. We must reach a mutually beneficial outcome, but as of now, it is not clearly visible what each side of the table wants,” Lee said.

Concerning relations with Japan, Lee said he was willing to establish a joint statement with his Japanese counterpart Shigeru Ishiba, which might be equivalent to the declaration Kim Dae-jung and Keizo Obuchi signed in 1998.

Under that declaration, the South Korean president and the Japanese prime minister had agreed to build a future-oriented bilateral relationship.

Seoul and Tokyo are"inseparable neighbors" that need to work together to achieve regional security and economic prosperity, Lee said.

But at the same time, the two countries have issues to settle, such as the historical differences over Japan's 1910-45 colonial rule of Korea and the controversy over Dokdo, an islet under South Korea's sovereignty.

Housing regulation, prosecutorial reform

Regarding measures to curb housing prices, through his administration's latest measure to discourage banks from extending more than 600 million won ($441,000) in mortgage loans to aspiring hombuyers, Lee said his government is ready to roll out more stringent measures to stop housing speculation in the Greater Seoul area.

"Speaking of the housing (price) issue, the recent revelation of our plans to restrict new mortgages for those aspiring to buy a home is just the start," Lee said."I’m trying to turn the tide."

This comes as the Lee administration seeks to prevent the housing price from skyrocketing and at the same time stop the population drain in remote regions due to overconcentration of the capital.

In this vein, Lee said he was not considering designating additional new towns to meet housing demands because it could prompt overpopulation in Greater Seoul.

“It is like drinking salt water when you feel thirsty,” Lee said.

As to the ruling party-led overhaul of the criminal justice system seeking to strip the public prosecution service of its authority to investigate crimes, Lee said that prosecutors"kind of had it coming."

The president said the prosecution service's power to both investigate and indict has long been prone to abuse.

Shortly after Lee took office, the Democratic Party issued a series of bills that would abolish the prosecution service as it is and set up new investigative bodies, much like how the administration under former President Moon Jae-in established the Corruption Investigative Office for High-ranking Officials by splitting the prosecution's functions.

Under the Democratic Party bills, prosecutors would lose their authority to investigate crimes completely as well as to complement police investigations.

With the prosecutors' office turning into a government body under the Justice Ministry, prosecutors would decide whether to indict the accused and present their case in court based on the results of an investigation they did not conduct.

In the meantime, the bill suggested that the prosecutors' power to investigate would be handed over to a new agency established under the Prime Minister's office. Civil servants who are not active prosecutors would be eligible to join the agency, leaving the door open for police to join it. Lee said, however, that the process of transferring the investigative power might have the side effect of making the police more powerful.

On the administration's push to distribute coupons valued at between 150,000 won and 520,000 won to every South Korean, Lee said direct cash handouts had proven effective as a stimulus policy during COVID-19. The president said that such measures will be"more effective" in terms of boosting the local economy in execution than anticipated.

In order to restore the country's health care systems that had been marred by prolonged walkouts by junior doctors, Lee said that dialogue with the medical community would be the"first step."