The U.S. government is demanding that South Korea invest more in the United States than the $350 billion agreed in last year's tariff negotiations, according to officials. Seoul is negotiating to adjust the targets and scale of the projects within the $200 billion earmarked for strategic investment.
The Ministry of Trade, Industry and Energy recently briefed the chairman of the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee on the follow-up talks over strategic investment, political sources said on the 8th. "I understand the ministry reported the details to the chairman," a committee official said. "It appears the U.S. side has asked for a level above the original negotiating package."
In last year's tariff talks, South Korea agreed to pursue a total of $350 billion in U.S. investment in return for Washington lowering tariffs to 15% from 25%. Of that, $150 billion is for shipbuilding and $200 billion for strategic investment. The current discussions concern the strategic investment portion. The government is adjusting the scale and targets of the projects requested by the U.S. within the $200 billion ceiling.
The main projects under discussion are a gas-fired combined-cycle power plant in Encinal, Texas, eight large nuclear reactors, and liquefied natural gas development in Alaska. Combined, the scale of the projects sought by the U.S. side exceeds not only the strategic investment ceiling but also the entire investment package agreed last year, according to the assessment. The government is negotiating whether to include only some of the projects or to include several by adjusting the investment amount for each.
For the Encinal plant, the investment size is already being revised. The government initially considered an investment of around $20 billion, but the U.S. side requested $25 billion, and talks are now proceeding at about $22 billion, sources said.
On nuclear power, a plan to build eight large reactors, including two Korean-designed units, is under review. At an estimated $15 billion per large reactor, building eight would amount to $120 billion. Including the Encinal plant, the two projects alone would total $142 billion.
The Alaska LNG development project is also on the negotiating table. The government is reviewing the commercial viability of the project with private-sector members while discussing the investment size and terms, sources said. The ministry is working to adjust the investment amounts for each detailed project based on the U.S. demands.
Because including all of the projects requested by the U.S. could push the total beyond the $200 billion set aside for strategic investment, the government is also weighing adjusting the investment size for each project or excluding some of them.
The government plans to brief the National Assembly on the follow-up strategic investment talks behind closed doors on the 17th. A memorandum of understanding between the two countries could be signed as early as the 18th, though the timeline may shift depending on the outcome of the detailed negotiations.
