'Korea-US 2+2 Trade Talks' Enter Final Countdown... Three Key Variables: Trump's Appearance, Exchange Rates, Defense Costs

Domestic Concerns Over 'No Agreement Before Elections'

As the '2+2 Trade Talks' between Korea and the US, which could lower mutual tariffs, enter the final countdown, there is growing speculation that three factors could emerge as variables: President Trump's 'direct involvement', defense costs, and exchange rate issues. The 2+2 talks between the two countries are expected to start at 9 PM Korean time (8 AM local time) on the 24th and last for about an hour.

According to the Ministry of Trade, Industry and Energy and other relevant authorities, the government has set a plan to quickly negotiate three key issues mentioned by Acting President Han Duck-soo after a phone call with President Donald Trump: △ reducing the trade surplus with the US △ participating in US liquefied natural gas (LNG) projects such as those in Alaska △ and Korea-US shipbuilding cooperation. It is also reported that a basic 'answer sheet' has been prepared for most of the non-tariff barrier lists mentioned by the US. Initially, the government did not intend to address non-tariff barriers in the 2+2 talks, but it is likely to be discussed in the subsequent talks between Minister of Trade Ahn Deok-geun and US Trade Representative (USTR) Representative Jamieson Greer.

Moreover, the fact that President Trump directly appeared in talks with Japan and mentioned Japan's non-tariff barriers one by one is also a burden for our government. This is the background for forming a support team of over 60 members from eight ministries, including not only the Ministry of Strategy and Finance and the Ministry of Trade, but also the Ministry of Environment, the Ministry of Agriculture, and others.

Analysts suggest that there are three main variables. If President Trump makes a surprise appearance and leads the talks, there is a possibility that 'preparation' could become meaningless. President Trump appeared in previous talks with Japan and mentioned non-tariff measures such as △ automobile safety standards △ opacity in rice import distribution △ and expansion of imports of agricultural products like meat. All these were mentioned as 'non-tariff barriers' concerning Korea as well. Instead of the content that the authorities of the two countries agreed to discuss while preparing for the 2+2, the agenda could flow according to President Trump's pace. A government official explained, "We prepared for negotiations with all possibilities in mind, including the appearance of President Trump."

Like with Japan, the defense cost issue could also come to the fore. Just as he complained about the 'insufficient burden of US military presence costs in Japan', he could make the same demand to us. The government's delegation to the US does not include officials to discuss defense cost issues.

Similarly, issues like exchange rates and VAT, which President Trump has claimed as 'non-tariff barriers', could also be mentioned. This is because Deputy Prime Minister and Minister of Strategy and Finance Choi Sang-mok and US Treasury Secretary Steven Mnuchin are the parties to the 2+2 talks.

Until recently, trade authorities maintained that "this 2+2 meeting is also an 'exploratory battle' and practical discussions are important, just like with Japan, which is preparing for follow-up talks." Since the non-tariff barriers emphasized only in the USTR's National Trade Estimate (NTE) report or President Trump's remarks were not officially requested by the US, there was a strong intention to find out what the exact demands were.

However, the analysis that the US's desire for 'swift and decisive' action is increasingly becoming a burden is growing. From the US perspective, the need to achieve results in negotiations with allies is increasing, as China, the target of tariff policies, has yet to appear at the negotiation table, and domestic public opinion on tariff policies is deteriorating.

Conversely, there is also an analysis that 'time is on Korea's side'. The negotiation team faces growing opposition against 'hasty agreements' amid a leadership vacuum and early presidential elections, and it is not easy for officials to present a clear card to the US. A former trade official explained, "Korea needs to clearly appeal to the parts where it can contribute to the US supply chain as an ally," adding, "Given the growing public opposition within the US to enforcing tariffs, it is important to quickly negotiate and promote achievements."

Reporter Kim Dae-hoon