South Korea warns U.S. trade deal could blow up over investment terms
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A ship christening at a South Korean-owned shipyard in Philadelphia. Photo: Matthew HatcherAFP via Getty Images
A top South Korean official warned Tuesday that key elements of the country's trade deal with the U.S. are at risk, amid a dispute over how to deploy a $350 billion investment fund.
Why it matters: Tensions between the two allies could boil over quickly, as the trade dispute compounds with the fallout from last week's ICE raid at a Hyundai-linked battery plant in Georgia.
- The scenes of South Korean workers being hauled away from the plant in shackles inflamed national outrage there, and prompted the country's foreign minister to head to the U.S. for high-level talks.
Catch up quick: In late July the two countries struck a trade pact, which the U.S. said included a $350 billion investment fund to support shipbuilding and other projects.
- Officials indicated at the time it would be structured like a $550 billion fund deal with Japan, which gives President Trump huge personal leverage to pick projects to fund and deploy capital.
Yes, but: Korea's Yonhap news agency reported Tuesday that a trade delegation is in the U.S. this week to try to iron out the deal, including an ongoing dispute over whether the fund will cover direct investments or simply loan guarantees.
- Bloomberg quoted a top official as saying South Korea would not accept the same terms as Japan, given the larger impact investing that much money would have on the Korean economy.
- "Without an agreement, it will be difficult for the (shipbuilding) project to even get off the ground," Kim Yong-beom, director of national policy in the presidential office, reportedly said at an event. "The circumstances facing South Korea and Japan are fundamentally different."
What to watch: How the U.S. responds and whether it impacts the broader trade deal, which included lower tariffs on South Korean-made cars and other products.
- Those lower auto tariffs are not yet in effect — and Bloomberg quoted Kim as saying that while they're important, they're not worth rushing the fund to completion, either.
Go deeper: Raid at Georgia battery plant points to conflicts in Trump's growth plans
