50/50 distribution until principal and interest are recovered…"Commercial rationality" stated in the MOU
Policy Director: "Foreign exchange market tolerance... Defending against further opening of agricultural sector."
(Gyeongju = Yonhap News) Reporters Lim Hyeong-seop, Lee Sang-hyeon, and Hwang Yun-gi = South Korea and the United States agreed on the 29th to invest $200 billion in cash out of a total of $350 billion in the United States, but to limit the annual limit to $20 billion.
Kim Yong-beom, the chief of staff for policy at the Blue House, announced the results of the agreement on the details of the Korea-U.S. tariff negotiations at a briefing held that day.
Director Kim said,"The $350 billion in financial investment in the U.S. consists of $200 billion in cash investment and $150 billion in shipbuilding cooperation," adding,"It has a similar structure to the $550 billion financial package that Japan agreed to with the U.S., but we have set the annual investment cap at $20 billion."
He continued,"Because we invest based on the progress of the business within the limit of $20 billion per year, it is within the range that our foreign exchange market can tolerate, and we can minimize the impact on the market."
The $150 billion shipbuilding cooperation project, dubbed the"Masuga Project," will be led by Korean companies and will include guarantees in addition to investments.
Under this agreement, the U.S. automobile tariff on South Korea will be reduced from 25% to 15%. The reciprocal tariff of 15% has already been in effect since the agreement was reached in late July.
Director Kim also revealed that among the tariff items, pharmaceuticals and lumber will receive most-favored-nation treatment, while aircraft parts, generic drugs, and natural resources not produced in the United States will be tariff-free.
He added that, especially for semiconductors, tariffs will be applied at a level that is not disadvantageous compared to Taiwan, our main competitor, and that further opening of the agricultural sector, including rice and beef, will be blocked.
Director Kim said of this agreement,"We have also established separate grounds for requesting adjustments to the payment period and amount in cases where there are concerns about instability in the foreign exchange market," and explained,"The investment agreement is until January 2029, but the actual procurement will be carried out over a long period of time, and the impact on the foreign exchange market will be further mitigated as the procurement will be done through methods other than market purchases."
Additionally, he said,"We have established multi-layered safety measures to increase the possibility of recovering the principal," and "We have agreed to pursue only commercially reasonable projects where the principal and interest are guaranteed, and we will state this in the Memorandum of Understanding (MOU)."
In addition, he added,"Profits will be distributed 50/50 between Korea and the U.S. until the principal and interest are repaid, but if it appears that the principal and interest will not be fully repaid within 20 years, the profit distribution ratio can be adjusted."
