NEW YORK – US Commerce Secretary Howard Lutnick said on Thursday that South Korea should either accept a bilateral framework trade deal struck in July, or face steep tariffs, amid an impasse in negotiations to work out specifics of the deal.
“The Koreans didn’t sign when the president … came to the White House. He didn’t sign the piece of paper,” Lutnick said in a CNBC interview, referring to the Aug. 25 visit by Korean President Lee Jae Myung to Washington for a summit with President Donald Trump.
“The devil is in the details. They saw the Japanese now, so there’s no flexibility. The Japanese signed the contract … The Koreans either accept that deal or pay the tariffs. Black and white. Pay the tariffs or accept the deal,” he said.
Seoul and Washington reached a broad accord in July to lower 25% reciprocal tariffs on cars and other goods to 15% in return for Korea’s commitment to invest $350 billion in the US.
The two sides have been in talks on the makeup of the investment package, profit sharing and other details. The talks, however, made little progress amid disputes over the structure, funding and how to handle returns from investments.
Regarding the final signing of the US-Korea trade deals, Korean President Lee said during a press conference marking his first 100 days in office on Thursday that Korea “will sign if it is good, but why sign if it is not in our interest?”
Last week, Japan finalized a similar deal, committing $550 billion to a US-managed fund to invest in projects, including an Alaska liquefied natural gas pipeline and new nuclear power plants.
Lutnick said Tokyo faces “no loss to taxpayers” as proceeds would eventually repay government borrowing.
Kim Yong-beom, Korea’s presidential chief of staff for policy, said the scale and financing of the Korean package risk destabilizing Korea’s foreign exchange markets.
“We’re trying to make the US understand how important it is for us to raise $350 billion without sending shocks through our foreign exchange market,” he said.
Lutnick’s sharp tone remarks came as Korea’s Trade and Industry Minister Kim Jung-kwan flew to New York to meet him and continue trade negotiations with US officials.
KOREAN EMPLOYEES DETAINED IN GEORGIA RETURNING HOME
The tug-of-war comes as more than 300 Korean workers detained in Georgia in a high-profile immigration sweep are flying home on a chartered plane.
A Korean Air Lines Co. plane carrying them took off from Hartsfield-Jackson Atlanta International Airport in Atlanta, Georgia on Thursday, a week after they were detained in the raid at an electric vehicle battery plant construction site for a joint venture between Hyundai Motor Co. and LG Energy Solution Ltd., in Georgia.
The detained employees were alleged to have worked on the site without proper work permits.
Earlier, Seoul expressed its “deep” displeasure over the US raid and the public release of footage showing the operation, which involved armored vehicles and the shackling of workers.
Asked about the issue of foreign workers’ work permits during that CNBC interview, Lutnick said that Trump will “go out and address that.”
“He knows that to build these great factories, we need leadership of people who built them before. He wants to do it fast,” said the commerce secretary.
“He’s going to make a deal with different countries that when they want to build big here, he’ll find a way to get their workers proper work visas, meaning short-term work visas, train Americans and then head home. I think the president is very clear.”
Analysts said the impasse in US-Korea trade talks could drag on.
“The US sees Japan’s deal as the benchmark, while Seoul is concerned about financial stability,” said a Seoul-based trade expert.
By Hyun-Suk Kim
realist@hankyung.com
In-Soo Nam edited this article.
