Korea Says Fact Sheet With US on Trade, Security Finalized

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(Bloomberg) — South Korean President Lee Jae Myung said that a joint fact sheet outlining trade and security terms agreed with the US has been finalized, marking a milestone in the months-long negotiations. 

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“The trade negotiations and security consultations between South Korea and the US — one of the most critical variables for our economy and national security — have been officially concluded,” Lee told reporters in a briefing Friday. 

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The finalized document builds on an earlier agreement reached during President Donald Trump’s visit to South Korea late last month. The deal includes a $350 billion facility meant to channel Korean investment into strategic US industries including shipbuilding, energy and semiconductors.

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South Korea also committed to buy $25 billion in US military equipment by 2030 and contribute $33 billion in support for US Forces Korea, according to a statement released by the White House.

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The US will apply a 15% tariff cap on imports of Korean goods, including autos and pharmaceuticals. While auto duties will be lowered from the current 25%, the new rate remains well above the 2.5% Korea previously enjoyed under the free trade agreement. On semiconductors, the US pledged to offer Korea terms “no less favorable” than those extended to other major trading partners.

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The US also plans to remove supplemental tariffs imposed under executive orders on select products such as generic drugs, their ingredients and precursors, and certain natural resources not produced domestically. Tariffs will likewise be eliminated on specific aircraft and parts from South Korea that were previously covered by a separate executive order.

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The fact sheet will serve as the basis for a formal memorandum of understanding, getting rid of a major source of uncertainty for South Korea’s export-driven economy.

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Read also: US, South Korea Finalize Deal on Investments, Lower Tariff Rate

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Lee stressed that the investments would be limited to commercially viable projects, explicitly addressing public concerns that the package could amount to aid or unrecoverable losses. The US also agreed to cap Korean dollar outflows at $20 billion annually, with flexibility to adjust timing if needed, to prevent currency market instability, the joint fact sheet showed.

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On security, Lee also confirmed that the two nations agreed to move forward with the construction of a nuclear-powered submarine, a decades-long strategic goal for Seoul. South Korea also secured US backing to expand its rights related to uranium enrichment and spent nuclear fuel reprocessing, he added. The US reaffirmed its extended deterrence commitment, including nuclear capabilities, and welcomed Seoul’s pledge to raise defense spending to 3.5% of gross domestic product. 

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The fact sheet was released more than two weeks after the two countries agreed to finalize the deal. Acknowledging the delay, Lee said intense debate took place with regards to the precise wording, given the gravity of the issues involved. Nuclear fuel enrichment, reprocessing, and the submarine agreement were particularly sensitive, he noted.

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“This was a matter that could determine our national fate, and for that reason, we could not afford to treat even a single word or clause lightly,” Lee said. “It was a negotiation of great importance — one that came with many difficulties and obstacles.”

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—With assistance from Seyoon Kim and Shinhye Kang.

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(Updated with more details throughout.)

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