Korea to take cautious approach toward US tariff talks

Lee Jae-myung, center, the presidential candidate of the liberal Democratic Party of Korea, pledges to revive the economy during a campaign rally near the Express Bus Terminal in Seoul, Thursday. Yonhap

Korea is expected to slow the progress of tariff talks with the United States following the election of Lee Jae-myung from the liberal Democratic Party of Korea (DPK) as president in Tuesday’s snap election.

Lee defeated Kim Moon-soo of the conservative People Power Party, winning 49.42 percent of the vote to Kim’s 41.15 percent.

Lee has repeatedly expressed his intent to delay the signing of the "July Package," scheduled for July 8 — the date when the delay of the U.S. "reciprocal" tariffs ends — objecting to the plan devised by negotiators appointed by impeached former President Yoon Suk Yeol.

"We do not need to reach an agreement earlier than other countries," Lee said during a televised debate on May 18, when asked about his approach to trade negotiations with the U.S., widely seen as a priority task for the export-reliant country's next administration.

Lee's appointment of former Trade Minister Kim Hyun-chong as his adviser on diplomatic affairs also signals a hawkish stance.

Kim resisted U.S. demands during the 2017 renegotiation of the Korea-U.S. Free Trade Agreement. Speaking to reporters in Washington last month, Kim said he told White House officials that Korea needs more time to discuss tariffs.

"He doesn't want to sign a bad deal early and look foolish later," Jeremy Chan, a senior analyst at Eurasia Group, was quoted as saying in GZERO Media, the political risk consultancy's media arm.

To boost stagnant domestic consumption — another key agenda item — Lee pledged to introduce an extra budget of at least 35 trillion won ($25 billion). A portion of the funds will likely be used to distribute "local currencies," which allow residents to purchase items from neighborhood stores at discounted prices.

However, Lee was cautious this time about providing an annual basic income of 250,000 won to all citizens — a policy criticized by conservatives as populist. Instead, he proposed a broader vision of a "basic society" aimed at guaranteeing everyone a minimum standard of living.

"Stabilizing livelihoods and reviving the economy are more urgent than reform measures," he said during a press conference a day before the election.

To address concerns that his welfare policies could hamper economic growth, Lee vowed to develop the artificial intelligence (AI) sector as Korea's next growth engine. He plans to designate AI as a national strategic industry, with a 100 trillion won investment to secure 50,000 high-performance graphics processing units and build data centers.

"I can make Korea an advanced industrial powerhouse where AI experts from around the world come to find jobs," he wrote on Facebook on Election Day.

Lee also remains confident about revitalizing the sluggish domestic stock market by eliminating the so-called Korea Discount through amendments to the Commercial Act.

The proposed changes would expand corporate directors' fiduciary duties beyond the company to include shareholders. Although the capital market has advocated for the bill, the former government vetoed it, citing concerns about potential management disputes involving minority shareholders and activist funds.

Lee's labor policies could also place a burden on businesses, as he supports reducing working hours and strengthening union rights.

He pledged to pass the so-called "yellow envelope law" — a proposed amendment to the Trade Union Act that failed under the Yoon administration. The proposed law allows subcontracted workers to negotiate directly with their employers' clients and prohibits management from demanding compensation for illegal strikes.