South Korea and the United States began follow-up talks on their
tariff agreement, which includes a $350 billion investment fund in
the United States, but failed to bridge their differences. With the
fallout from the detention of Korean workers still reverberating,
Seoul is reportedly preparing for the possibility that negotiations
could stretch until after U.S. President Donald Trump’s expected
visit to Gyeongju for the Asia-Pacific Economic Cooperation summit
next month.

Industry Minister Kim Jung-kwan, who met with U.S. Commerce Secretary
Howard Lutnick for follow-up consultations on the trade agreement and
returned home on Sept. 14, told reporters when asked about the
outcome of the talks, “Bilateral consultations are still in
progress.” Lutnick, speaking on Sept. 11, a day before the Korea-
U.S. industry ministers’ meeting, cautioned “Korea must either pay
tariffs or accept the agreement, black or white,” and warned that if
Seoul rejects U.S. demands, tariffs could be restored to 25 percent.

A government official said that the gap between the two sides remains
significant. “Tariff talks are defined by each side presenting new
conditions to strike an optimal balance. They are a process of fine-
tuning, and completion comes when our interests are secured,"
Presidential spokesperson Kang Yoo-jung also told a briefing that
day. "Many variables remain at this stage.”

On July 30, the two countries reached a tariff agreement under which
the United States would cut reciprocal tariffs on South Korea from 25
percent to 15 percent in exchange for Seoul creating a $350 billion
investment fund in the United States. But the talks have since
stalled, as Washington has demanded that Seoul sign a memorandum of
understanding similar to one it concluded with Japan. The U.S.-Japan
MOU is said to require Tokyo to inject cash within 45 days once the
United States designates an investment target, with Washington taking
90 percent of the returns after the investment is recovered.

Despite U.S. threats to reinstate tariffs, the government has decided
not to rush the negotiations. With distrust in U.S.-bound investment
growing among Korean companies after the detention of Korean workers
in Georgia, and with domestic opinion turning increasingly negative,
Seoul finds it difficult to readily accept Washington’s demands.
“We cannot delay the talks indefinitely, but there are many
variables,” a senior government official said. “We will make our
judgment by taking into account the U.S.-China tariff negotiations
and the APEC summit schedule.”

The government’s stance reflects preparations for the possibility
that Korea-U.S. tariff negotiations will be prolonged, given the APEC
summit in Gyeongju on Oct. 31 and the Nov. 10 deadline for U.S.
tariff suspensions on China. Earlier, a White House official told CNN
that preparations are underway for President Trump to visit Korea
during the APEC summit, saying, “The focus of the visit will be
economic cooperation, with trade, security and civil nuclear
cooperation included on the agenda.”