SOUTH KOREA FX STABILITY
Washington also accepted South Korea’s request that US$200 billion in cash investments as part of a US$350 billion package would come in instalments no larger than $20 billion a year in an effort to keep the won stable.
The fact sheet said the two countries have “a mutual understanding” that South Korea’s investment should not “give rise to market instability” in Asia’s fourth-largest economy.
If signs of instability appeared, South Korea could seek an “adjustment in the amount and timing of the funding, and the US will, in good faith, give due consideration to such request”, the fact sheet said.
The US will cut tariffs on South Korean products, including autos, to 15 per cent from 25 per cent. Chips, another major export item made by companies like Samsung Electronics and SK Hynix, will face tariff terms no less favourable than those for Taiwan, a presidential adviser said.
The agreement with Washington shows Lee made inroads on major security and energy initiatives by paving the way to build nuclear-powered submarines and expanding its nuclear energy capabilities.
In a televised briefing on Friday, Lee’s national security adviser said the two countries had discussed the issue of nuclear submarines on the “premise” that the vessels would be built in South Korea.
Trump previously said the submarines would be built in a Korean-owned shipyard in Philadelphia.
Analysts said it was too early to say whether South Korea got a better deal than Europe and Japan.
Doo Jin-ho, a security analyst at the Korea Research Institute for National Security, said acquiring nuclear submarines was no “game changer, but definitely better than any other weapons systems to beef up deterrence against North Korea”.
Kim Dong-yup, a former Navy officer now at Kyungnam University, said the agreement on nuclear energy and security meant Seoul had to pay much more for defence, but Lee was faced “with an inevitable choice”.
Washington “supports the process that will lead to (South Korea’s) civil uranium enrichment and spent fuel reprocessing for peaceful uses”, the joint statement said.
A trade deal was first unveiled in July, when South Korea agreed to invest hundreds of billions of dollars in US projects in exchange for lower tariffs.
