President Donald Trump said on Wednesday that he and South Korean President Lee Jae-myung have worked out most of the details of a bilateral trade deal.
“We made our deal, pretty much finalized it,” Trump told reporters while dining with Lee and other leaders on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in Gyeongju, South Korea.
“We discussed some other things to do with national security et cetera. And I think we came to a conclusion on a lot of very important items,” Trump said.
President Lee presented Trump with South Korea’s highest honor, the Grand Order of Mugunghwa, upon his arrival in Gyeongju, setting a very positive tone for their meeting. Trump is the first American president to receive the honor.
Lee also gave Trump a replica of a ceremonial crown, a gift guaranteed to delight the American president for several reasons, including that it will drive the American Left batty. Trump’s domestic opponents have been struggling to get a protest movement called “No Kings” off the ground, and the president of South Korea just gave him the ultimate symbol of royal office.
“I’d like to wear it right now,” Trump said when he accepted the crown, causing left-wing media like the New York Times to gasp in helpless editorial despair.
Having done everything possible to put Donald Trump in a good mood, Lee sat down to bilateral negotiations with the American president that apparently went quite well.
The broad outlines of the agreement were drawn up in July. One of the biggest commitments offered by South Korea was a pledge to invest $350 billion in the United States. Trump and Lee reportedly agreed that South Korea can structure these investments in two funds – a $200 billion general investment account to be funded in $20 billion annual installments, plus a more urgent $150 billion fund devoted to investments in American shipbuilding.
Trump has emphasized the importance of restarting the American shipbuilding industry, which dwindled away to producing only a few ships per year under intense anticompetitive pressure from China. Beijing slapped punitive sanctions on five subsidiaries of South Korean shipbuilding company Hanwha Ocean in mid-October to punish the company for investing in American ports.
Kim Yong-beom, an aide to President Lee, said on Wednesday that the U.S. and South Korea will reduce their reciprocal tariff rates from 25 percent to 15 percent under the deal. South Korea was especially keen to lower the U.S. tariff rate on its automobiles, which were being levied at a higher rate than competitors in Japan and Europe.
South Korea’s Yonhap News reported that pharmaceuticals and lumber will also be given “most-favored nation” status, while airplane parts and natural resources that cannot be produced in the United States will be exempt from tariffs, and South Korean semiconductors will face the same levies as those from Taiwan.
“Through this agreement, we expect to improve conditions for Korean companies entering the U.S. market and secure a more favorable export environment than other nations. We also anticipate that clarifying the specific scope and timing of tariff reductions will significantly reduce market uncertainty,” Kim said.
South Korean investors and corporations are very eager to reduce market uncertainty, while Trump and Lee both sought to lower expectations for a grand trade deal announcement this week. Kim echoed Trump’s remark that the terms of the deal are “nearly finalized,” and a detailed fact sheet should be released within a few days.
According to Kim, the final version of the trade deal will include mechanisms that prevent either side from making dramatic changes. The deal will be based on the principle of “commercial rationality,” which essentially means neither side will expect companies from the other country to make unreasonably expensive or risky investments.
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