[Weekly Review] Sharp Clash Between Ruling Party and Government Over '19 Trillion Won Excess Tax Revenue'... US Trade Secretary Visits Korea to Build Encirclement Around China

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kwon Haeyoung] This week, the ruling party and the government clashed head-on over the Ministry of Economy and Finance's forecast of this year's excess tax revenue. The U.S. Trade Representative, aiming to establish a new economic order in the Indo-Pacific region and strengthen the encirclement of China, visited Korea for the first time in 10 years to discuss cooperation on supply chain construction and the establishment of bilateral cooperation channels between the two countries.

◆Conflict between ruling party and government intensifies over 'excess tax revenue discrepancy' sparked by disaster relief funds＝On the 17th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said, "We apologize for the tax revenue discrepancies such as the occurrence of excess tax revenue," and added, "We regret the ruling party's claim of intentional understatement of excess tax revenue."

The controversy over the Ministry of Economy and Finance's excess tax revenue discrepancy began with Lee Jae-myung, the Democratic Party's presidential candidate, pushing for nationwide disaster relief funds. The Ministry expressed reluctance to use the excess tax revenue as the source for nationwide disaster relief funds, as 19 trillion won more taxes were collected than the amount announced during the supplementary budget formulation in July. The controversy over excess tax revenue spread after Yoon Ho-jung, the Democratic Party floor leader, stated on the 16th, "We have confirmed that there is an additional 19 trillion won in excess tax revenue even after the second supplementary budget." Previously, the Ministry had revised its excess tax revenue forecast from "a little over 10 trillion won" on the 8th of this month to "in the 10 trillion won range" two days later on the 10th. The ruling party even raised the pressure on the financial authorities by mentioning a 'state audit.'

For now, the conflict between the ruling party and the government seems to be settling as candidate Lee stepped back on the 18th, saying, "I will not insist on nationwide disaster relief funds." However, the spark for Lee Jae-myung's disaster relief fund push remains as Democratic Party leader Song Young-gil mentioned that disaster relief payments could be pursued in March next year after the budget settlement is completed.

[Image source=Yonhap News]

◆Korea-U.S. Trade Ministers Meeting… U.S. strengthens China containment by joining hands with allies＝On the 19th, Yeo Han-gu, Director-General for Trade at the Ministry of Trade, Industry and Energy, and Katherine Tai, U.S. Trade Representative (USTR), discussed ways to strengthen trade cooperation between the two countries at the 6th Korea-U.S. Free Trade Agreement (FTA) Joint Committee held at the Shilla Hotel in Jung-gu, Seoul. The Korea-U.S. FTA Joint Committee was established to review the implementation status of the Korea-U.S. FTA, which came into effect in 2012, ahead of its 10th anniversary.

At this trade ministers' meeting, they also discussed ways to strengthen the Korea-U.S. strategic partnership on new trade issues such as supply chains, technology, digital, and climate change related to trade policy. The two countries agreed to enhance their strategic partnership on various new trade issues including supply chains, technology, digital, and climate change in relation to recent changes in the global trade order and paradigm. To this end, they also agreed to establish channels under the Korea-U.S. FTA framework to discuss and cooperate deeply on these issues.

On the 19th, Representative Tai also met with An Kyung-duk, Minister of Employment and Labor, to discuss cooperation measures to improve labor rights. Representative Tai, effectively targeting China, said, "The U.S. and Korea should strengthen cooperation in the labor sector, as in diplomacy and defense, to prevent forced labor and child labor."

This official visit by the U.S. Trade Representative to Korea for the first time in 10 years, as part of an Asia tour, is aimed at establishing a new economic order in the Indo-Pacific region and effectively strengthening containment of China. The U.S. is actively building a new economic alliance system to counter China. Representative Tai, who previously visited Japan, decided to establish a 'U.S.-Japan Trade Consultative Body.' She emphasized, "Facing the challenge of China, we must unite with allies and partners who share economic interests and understanding." After Korea, she plans to visit India, a member of the security consultative group 'QUAD,' to further tighten the encirclement of China.

This content was produced with the assistance of AI translation services.