National Interest Over Speed... All-Out Push for "Long-Term Installment Investment" and "Minimized Cash" in U.S. Fund

Key Issues for the U.S. Investment Fund: Cash Investment Ratio and Payment Period
Investment Decision Rights and Profit Distribution: Other Major Issues
Expectations for an Agreement at the Korea-U.S. Summit During APEC
Negotiation Team Prioritiz

The negotiation team is accelerating its efforts for follow-up discussions on the Korea-U.S. tariff negotiations. The main issues are the method of payment and the proportion of cash investment related to the 350 billion dollar (approximately 500 trillion won) 'U.S. Investment Fund.' One or two contentious points, which remain sharply disputed between Korea and the United States, must be dramatically resolved for any achievements to be announced at the second Korea-U.S. summit, scheduled to coincide with the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju at the end of October. However, the negotiation team does not intend to rush simply because of the APEC timeline. They intend to prioritize national interests over speed.

Yonhap News Agency

On the 22nd (local time), Kim Yongbeom, Chief Policy Officer at the Presidential Office, and Kim Jeonggwan, Minister of Trade, Industry and Energy, met with Howard Lutnick, U.S. Secretary of Commerce, who holds the key to the Korea-U.S. tariff negotiations, at the U.S. Department of Commerce in Washington, D.C. The two officials, who have been making three-day, two-night trips to the U.S. every two to three days for the final stages of negotiations, immediately traveled to Atlanta and will return to Korea in the early hours of the 24th.

After meeting with Secretary Lutnick, Kim Yongbeom told reporters, "We discussed many issues regarding the remaining points of contention. There has been some progress," but added regarding the outstanding issues, "There are not that many left. More discussion is needed." When asked if the negotiations were in their final stage, he replied, "It is not yet the final phase. Negotiations are never over until they are truly over," but did not specify what the remaining issues were or what progress had been made.

Key Issues for the U.S. Investment Fund: Proportion of Cash Investment and Payment Period

The core issues for the U.S. investment fund are the proportion of cash investment and the payment period for the investment. When the broad framework for the Korea-U.S. tariff negotiations was agreed upon in July, the Korean government planned to limit the cash investment ratio to a maximum of 5%, with the remainder to be executed through loans and guarantees. However, the United States, citing its negotiations with Japan, insisted that the entire amount must be paid up front in cash, contrary to the Korean government's plan. Since then, the Korean government has consistently argued that the method proposed by the U.S. is fundamentally unworkable, citing the potential shock to the foreign exchange market from a massive outflow of dollars and the principle of prioritizing national interests.

The negotiation team is reportedly aiming to minimize the proportion of cash investment and maximize the payment period in the final negotiations. If the total investment amount of 350 billion dollars-exceeding 80% of Korea's foreign exchange reserves-cannot be reduced, then the only way to mitigate the burden on the Korean economy is to lower the cash investment ratio, which the U.S. initially demanded at 100%, and to extend the installment period as much as possible. This is because Korea's available foreign exchange reserves for a year are only about 15 to 20 billion dollars. The "one or two issues" mentioned by Kim Yongbeom are likely closely related to this matter. On October 20, immediately after returning from the U.S., Minister Kim Jeonggwan was asked whether the U.S. was still demanding full cash investment. He replied, "Not to that extent. The U.S. side has accepted much of our position," indicating a more positive atmosphere.

However, it remains uncertain whether the U.S. will accept the Korean government's demands. While the U.S. has become more understanding of the risk of destabilizing the foreign exchange market if 350 billion dollars are paid up front, it is unclear whether the U.S. will accept Korea's request to extend the payment period, given that the European Union and Japan, which have already completed negotiations, have pledged to complete their investments by the end of President Donald Trump's term in 2029.

Yonhap News Agency

Other Major Issues: Investment Destination Selection Rights and Profit Distribution

The distribution of profits before and after the recovery of the principal investment from the U.S. investment fund is another point of contention. The negotiation team has been working to include a mechanism in the memorandum of understanding (MOU) that would ensure stable recovery of the investment, based on the "commercial rationality" emphasized by President Lee Jaemyung. Previously, the U.S. proposed that the entire fund be invested in cash, with profits distributed 9:1 in favor of the U.S. before the principal is recovered, and 1:9 after recovery. Recently, it is reported that the U.S. has requested a 5:5 profit split before principal recovery if the Korean government’s request to lower the cash investment ratio is accepted. This means the U.S. would take a greater share of profits before Korea recovers its principal, making the period required for Korea to fully recover its investment even longer.

The right to select investment destinations must also be clearly defined from the initial MOU stage, as failing to do so could become a long-term burden. Japan, after raising 550 billion dollars in full, ceded the right to select investment destinations and suppliers to the U.S. The profit split for Japan is also 5:5 before principal recovery and 1:9 after. If the U.S. insists on taking the right to select investment destinations based on the Japanese precedent, Korean companies may face reduced opportunities for participation, as well as difficulties in recovering their investment.

Will an Agreement Be Reached at the APEC Summit? National Interest Prioritized Over Timeline

If a final agreement is reached before APEC, it is expected that the details will be confirmed as part of the Korea-U.S. summit, which is anticipated to take place on the 29th during APEC. Even if an MOU is not signed, a "fact sheet" could be released, and depending on the progress of negotiations, the Korea-U.S. summit at APEC could see the simultaneous announcement of both tariff reductions and security agreements. In the security field, diplomatic sources expect the agreement to include increased defense spending by Korea, plans to modernize the alliance, and strengthened nuclear cooperation.

Before leaving for the U.S., Kim Yongbeom told reporters, "There were major achievements at the last Korea-U.S. summit in Washington, but they were not announced in a unified manner. If the trade MOU is completed, I expect that the major achievements provisionally agreed upon at the Washington summit could be announced all at once." If the agreement proceeds smoothly, it could include increased defense spending, purchases of U.S. weapons, and revisions to the nuclear cooperation agreement.

Conversely, if Korea and the U.S. fail to narrow their differences, it is likely that no agreement will be produced at the APEC Korea-U.S. summit. Kim Yongbeom stated, "The government is not considering signing an MOU based only on what has been agreed upon by a certain deadline while issues remain unresolved." This dismisses the possibility of a partial agreement, as some have suggested.

Going forward, the negotiation team plans to continue prioritizing national interests over being bound to a specific timeline. Concluding the negotiations prematurely without fully resolving the differences could have long-term detrimental effects on the Korean economy. Regarding the possibility of reaching an agreement at APEC, Kim Yongbeom said, "Negotiations involve the other party and circumstances can change at any time, so it is difficult to predict in advance," taking a cautious stance. Minister Kim Jeonggwan also commented, "There will likely be tension until the very last moment," and added, "We will do our best to ensure that our national interests are fully reflected until the last minute and the last second."

President Lee Jae-myung Interviewing with CNN (Seoul=Yonhap News) President Lee Jae-myung is interviewing with CNN at the Freedom Hall of the Yongsan Presidential Office on the 22nd. 2025.10.23 [Provided by the Presidential Office. Resale and DB prohibited] Photo by Yonhap News (End)

President Lee Jaemyung: "It May Take More Time, But I Expect a Reasonable Agreement"

In an interview with CNN released on the 23rd, President Lee Jaemyung commented on the Korea-U.S. tariff negotiations, stating, "I think it will take a little more time, but I believe in the rationality of the United States. Ultimately, I believe both countries will be able to reach a reasonable agreement." He made this remark in response to a question about whether the two countries would sign a tariff agreement during the upcoming visit of President Donald Trump to Korea for the APEC summit next week.

Tariff negotiations with major countries are also a pressing issue within the United States. President Trump has expressed confidence, claiming that U.S. allies are "ripping off" the United States and describing the negotiations as "America's payday." However, there are concerns within the U.S., with some referring to the president's approach toward allies as a "mafia shakedown."

Regarding this, President Lee maintained a generally cautious stance on the negotiations. The Korea-U.S. tariff negotiations are an economically significant issue, and the potential for a North Korea-U.S. summit could be a major variable in the situation on the Korean Peninsula. President Lee stated, "I believe we will ultimately reach a reasonable outcome that everyone can accept, because we are allies and share common sense and rationality."

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