Industry Minister Who Met Lutnick: "Substantial Consensus on Sensitivity of South Korea's Foreign Exchange Market"

Kim Jeong-gwan, Minister of Trade, Industry and Energy, who returned on the 6th after visiting New York and holding follow-up talks with U.S. Secretary of Commerce Howard Lutnick on tariff negotiations, said, "I believe a considerable consensus was reached in this deal (negotiation) on parts such as the sensitivity of Korea's foreign exchange market."

Minister Kim said, "Regarding the proposal we submitted, especially the situation concerning the foreign exchange market, differences of opinion are narrowing," adding this comment.

Minister Kim held talks with Secretary Lutnick on the 4th (local time) in New York. It was reported that his visit to the U.S. was carried out secretly and swiftly to the extent that only key senior officials in the Blue House were aware and even trade authorities did not know.

Regarding this, Minister Kim said, "It was a holiday, and I happened to have the time to go. It was not a covert visit," and added, "I met only with Secretary Lutnick for the talks."

In the tariff agreement reached at the end of July between Korea and the U.S., the U.S. agreed to lower the reciprocal tariff it planned to impose on Korea from 25% to 15%, and Korea agreed in broad terms to implement a U.S.-bound investment package worth a total of 350 billion dollars (about 493 trillion won). However, disagreements remain over specific investment methods and profit-sharing issues, so they have not yet reached the signing of a memorandum of understanding (MOU) through documentation.

Korea, concerned about potential foreign exchange market instability that could arise from large-scale investment in the U.S., has set the conclusion of a currency swap with the U.S. as a "necessary condition."

When asked whether there had been any progress in concluding a currency swap during this meeting, Minister Kim said, "There were discussions," and added, "Rather than calling it progress, I think there was a mutual understanding regarding the shock or impact our foreign exchange market might receive from this deal."

Minister Kim said, "I don't know whether it would be an unlimited currency swap or something like that, but we shared an understanding that this deal is a very big and sensitive issue for the foreign exchange market."

When asked whether there had been discussions in this round of talks about President Donald Trump referring to Korea's investment in the U.S. as 'up front,' Minister Kim said, "There was no such discussion."

Asked whether there had been discussions on how to structure the U.S. investment package or on selecting investment destinations, he said, "Those specifics have not been discussed yet."

Participating via video in an emergency meeting on trade issues chaired by the Blue House the previous day, Minister Kim said, "There were discussions about the national interest and market stability that our people and our government consider important, as well as the importance of the Korea-U.S. relationship."

He added, "Right now, at a broad level, the impact on our foreign exchange market and the national economy is much more important, so we are narrowing differences on those points."

When asked whether there could be additional Korea-U.S. consultations before President Donald Trump visits Gyeongju to attend the Asia-Pacific Economic Cooperation (APEC) summit, Minister Kim said, "That is highly likely."

President Trump is expected to attend the ASEAN summit in Kuala Lumpur, Malaysia from the 26th to the 28th of this month and then visit Japan on the 28th for a U.S.-Japan summit.

He is also expected to visit Gyeongju on the 29th of this month for a summit meeting with Chinese President Xi Jinping, who will attend the APEC summit.

Hankyung.com reporter Shin Yong-hyun yonghyun@hankyung.com