Dispute Over $350 Billion Fund
A senior South Korean official cautioned Tuesday that parts of the country’s trade pact with the United States could collapse without agreement on how to use a $350 billion investment fund. The pact, reached in late July, was expected to support shipbuilding and other strategic projects. However, negotiations have stalled over whether the fund should be directed toward direct investments or structured as loan guarantees, a key sticking point for Seoul.
Tensions Escalate After ICE Raid
The dispute comes as bilateral tensions deepen following an immigration raid at a Hyundai-linked battery plant in Georgia last week. Images of South Korean workers being detained and shackled sparked outrage in Seoul, prompting the foreign minister to travel to Washington for urgent talks. The episode has added political pressure on both governments at a delicate moment in their economic partnership.
Different Terms Than Japan
The U.S. has likened the deal to a $550 billion fund agreement with Japan, which gave President Donald Trump significant control over investment decisions. But South Korea has rejected adopting identical terms, citing the unique scale and potential disruptions to its economy. “The circumstances facing South Korea and Japan are fundamentally different,” said Kim Yong-beom, director of national policy in the presidential office. He stressed that without a resolution, flagship shipbuilding projects may fail to launch.
Uncertain Path Forward
A South Korean trade delegation is in the U.S. this week seeking to iron out the disagreements. While both governments emphasize the importance of cooperation, the unresolved issues highlight the fragility of the pact. With mounting public anger in South Korea and pressure on Trump to secure foreign investment deals, the standoff could have significant economic and political repercussions if left unresolved.