South Korea eyes non-binding deal to steer $450 billion US investments
Shipping containers are seen at Pyeongtaek port in Pyeongtaek, South Korea, on April 15.
PHOTO: Reuters file
SEOUL — A top South Korean official said on Monday (Aug 25) that the US and South Korea had decided to establish a non-binding agreement to define the operation and structure of US$350 billion (S$450 billion) in investment funds agreed as part of a July trade deal.
Seoul agreed with Washington last month on a trade deal to cut US tariffs in exchange for pledging the investments, though differences emerged on how the sides interpreted details of the plan, including how profits would be distributed.
Presidential policy adviser Kim Yong-beom said on Monday the two sides were making progress in reaching an agreement in broad terms during his visit to Washington for the summit between US President Donald Trump and South Korean President Lee Jae-myung.
During his trip, Kim said he had held a separate meeting with US Commerce Secretary Howard Lutnick for two hours.
Kim said that the US hoped to agree a memorandum of understanding (MOU) to oversee the investment plan as soon as possible.
The "financial package" would be used to support strategic industries such as key minerals, batteries, chips, pharmaceuticals, artificial intelligence and quantum computing, Kim said. He reiterated that up to US$150 billion had also been earmarked for shipbuilding.
Seoul would create a task force to work on detailed implementation plans, led by the finance ministry and joined by state-funded banks, Kim said.
South Korean officials previously disputed Lutnick's remarks suggesting the US would take 90 per cent of the profits from the investments. Officials in Seoul also said equity investments would account for a small part, while loans and guarantees would make up a majority of the funds.
In July, Trump said South Korea would invest in projects "owned and controlled by the United States" and selected by him.
South Korean officials have said a safety mechanism would be added to reduce financing risk, including US commitments to buy products from the projects and invest in commercially feasible projects.
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