Presidential policy chief highlights safeguards in Korea-US tariff MOU

Presidential chief of staff for policy Kim Yong-beom answers lawmakers’ questions during a parliamentary audit of the presidential office at the National Assembly in Seoul, Thursday. Yonhap

Presidential chief of staff for policy Kim Yong-beom emphasized Thursday that the Korean government has made strong efforts to include multiple safeguard clauses in a memorandum of understanding (MOU) being prepared with the United States over ongoing tariff negotiations.

Kim, who led the negotiations, noted that the first article of the MOU will include the phrase “commercial viability” to help protect Korea’s economic interests. He made the remarks during a parliamentary audit of the presidential office at the National Assembly in response to questions from Rep. Kim Nam-geun of the ruling Democratic Party of Korea (DPK) about the risks of recovering principal and interest from investments in the U.S.

“The definition of ‘commercial reasonableness’ will also appear later in the MOU,” Kim said. “It stipulates that the investment committee shall, in good faith, determine whether there is a reasonable cash flow to recover the invested capital.”

He added that Article 1 of the MOU will also contain a provision ensuring that “projects with uncertainty in recovering principal and interest will not be approved by the government’s consultative committee from the outset.”

Addressing another concern from lawmakers that annual payments of $20 billion could negatively impact Korea's foreign exchange market, Kim said the planned investment volume is manageable and will pose no burden or shock to the local market.

He further said that, taking into account central bank reserves and the Foreign Exchange Stabilization Fund, Korea can comfortably secure between $15 billion and $20 billion.

“We calculated these figures in close consultation with the central bank to ensure there would be no market disruption,” said Kim, who used to serve as a key financial regulator.

Kim also noted that while the "50-50 profit-sharing ratio" agreed upon between the two countries could not be revised further, the MOU includes a clause allowing for adjustments “if uncertainty arises over the recovery of principal and interest.” He stressed that the government has made efforts to establish multiple safety mechanisms to minimize risk.

Presidential chief of staff Kang Hoon-sik speaks during a parliamentary audit session on the presidential office at the National Assembly in Seoul, Thursday. Yonhap

According to the sources familiar with the issue, two key documents are being finalized following the recent Korea-U.S. summit in Gyeongju: an MOU detailing the $350 billion U.S. investment package and a joint fact sheet outlining the summit’s agreements on tariffs, investment, trade and security.

Of the two documents, the joint fact sheet is expected to be released earlier than the MOU.

Presidential chief of staff Kang Hoon-sik said at the parliamentary audit session earlier in the day that the government plans to unveil the joint fact sheet “within this week.”

Although the government had initially said that the document summarizing agreements reached during the Korea-U.S. summit in Gyeongju on Oct. 29 would be released soon, more than a week has passed without an announcement.

He said the MOU will take longer than the joint fact sheet to be disclosed to the public.

“Since the signing of the MOU involves the other party, it is not easy for us to unilaterally estimate the timeline,” Kang said at the National Assembly, adding that “this issue spans multiple ministries, especially concerning foreign affairs and security, with agencies such as the U.S. Department of Defense and Department of Energy involved.”