U.S. President Donald Trump's $900 billion investment request from Japan and South Korea is encountering significant pushback, with both countries expressing cautious attitudes toward the proposed arrangements.
South Korea's government has indicated that the investment conditions demanded by the U.S. are unrealistic, while Japanese ruling party leadership candidates have hinted at potential reassessment of related agreements.
South Korean National Security Advisor Wi Sung-lac stated in an interview Saturday evening: "We cannot come up with $350 billion in cash," referring to South Korea's investment commitment with the United States. "From an objective and realistic perspective, this is not a level we can sustain." He added: "Our position is not a negotiation strategy."
In July, South Korea reached a $350 billion investment commitment with the United States as part of a broader trade agreement aimed at reducing U.S. tariffs from 25% to 15%. However, both sides remain divided on how to structure this investment plan.
Japan has made a similar $550 billion investment commitment, but specific implementation details remain unclear, with disclosed aspects of the agreement causing concern among Seoul officials.
South Korean Prime Minister Kim Min-seok stated last week that without reaching a currency swap agreement with the United States, this investment would severely impact South Korea's economy. The $350 billion investment represents over 80% of South Korea's foreign exchange reserves.
Japan has also expressed caution regarding its $550 billion U.S. investment plan. Popular candidate for Japan's ruling party leadership, Takaichi Sanae, indicated that Japan might renegotiate trade agreements with the United States if they do not serve Japan's interests.
Takaichi stated Sunday regarding the investment fund: "If we discover anything unfair or contrary to Japan's interests during the agreement's implementation, we must maintain our position. This could mean renegotiation is necessary."
Reports indicate that U.S. Commerce Secretary Howard Lutnick told South Korean officials that Washington prefers investments in cash rather than loans. Wi Sung-lac mentioned that the South Korean government is exploring alternative solutions and hopes to make progress when the two countries' leaders meet at next month's APEC summit in Gyeongju.
Additionally, South Korean Deputy Prime Minister and Finance Minister Choo Kyung-ho stated Saturday that he had completed negotiations with the United States on foreign exchange issues and would announce relevant details soon. Subsequently, a presidential official clarified that Choo's remarks related to the U.S. Treasury Department's report on major trading partners' currency policies.
**Japan-South Korea Investment Commitments and Foreign Exchange Reserves**
Meanwhile, as part of an agreement with the United States to reduce tariffs on Japanese export goods to 15%, Japan has agreed to accept a $550 billion investment plan, though the specific funding sources remain unclear.
A memorandum of understanding signed by both countries earlier this month stipulates that once Trump selects Japan-funded investment projects, Japan must raise funds within 45 working days. The funds must be deposited in U.S. dollars into one or more U.S.-designated accounts.
Japan's chief trade negotiator Akazawa Ryosei has consistently argued that the two main institutions responsible for funding these investments—the Japan Bank for International Cooperation (JBIC) and Japan Trade Insurance—will not provide funding for projects that do not benefit Japan.
Akazawa stated that he expects the investment mechanism will not significantly impact the Japanese government's finances, as its operation will follow existing laws governing JBIC and Japan Trade Insurance.
Akazawa previously indicated that only 1-2% of the $550 billion represents actual investment, with the remainder consisting of loans and loan guarantees.
Japan's Liberal Democratic Party is scheduled to vote for its next leader on October 4th. Takaichi Sanae and Agriculture Minister Koizumi Shinjiro are the two leading candidates in this race, which will likely determine Japan's next prime minister. The winner will need to continue negotiations with Trump regarding the implementation of trade agreements.
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