[Editorial] Lee should persist with guiding rules in tariff negotiations

Forward of their summit on Wednesday, the leaders of the US and South Korea had been locked in a staring contest on tariffs. Whereas South Korean President Lee Jae Myung stated that talks are in a impasse relating to “all” key particulars, US President Donald Trump ratcheted up the strain by saying that an settlement was “fairly near being finalized,” and that he was able to signal a deal if Korea was. 

The US$350 billion in money investments that the US is asking of Korea would certainly have large ramifications for Korea’s financial system. It’s crucial that we defend our nationwide pursuits and never give in to US strain. 

Throughout an interview with Bloomberg Information revealed on Monday, Lee stated, “The strategy of funding, the quantity of funding, the timeline, and the way we’ll share the losses and divide the dividends — all of those are essential sticking factors.” 

The most important level of rivalry is the quantity of direct money funding and the interval of the funding. The US has agreed to decrease the proportion of a money funding, however the quantity they’re demanding continues to be past what our financial system can deal with. The US has reportedly demanded annual investments of US$25 billion for eight years, leading to a complete of US$200 billion. 

Nonetheless, Rhee Chang-yong, the governor of the Financial institution of Korea, has stated that South Korea can solely use US$15 billion-US$20 billion per 12 months if the funds are to keep away from impacting the international change market. Contemplating that the nation wants a certain quantity of international foreign money reserves for emergency conditions, the precise quantity we are able to afford to speculate is far much less. The Korean public will solely settle for an settlement if it abides by such commonsense calculations. 

The 2 sides are additionally at odds over who has the precise to find out the place the investments will go. Within the MOU signed by the US and Japan, the final word authority to make the choice is granted to Trump. 

Whereas there’s no technique to know why Japan agreed to such an unfair association, Korea can’t do the identical. We can’t entrust cash funded by the general public’s taxes to the president of the USA. Contemplating the character of the Trump administration, it’s apparent that lobbyists will rush in to affect how the funds shall be distributed. The choice wouldn’t require congressional approval or analysis, that means the funds may even be misused to serve Trump’s private pursuits.  

If the investments lead to losses, South Korea would bear the brunt of them. 

The funding construction that has been revealed thus far consists of many poisonous clauses. It doesn’t matter what the funding is, when rules of profitability and transparency are eroded, the probability of failure is excessive. The US’ association with the EU, the place personal companies could make investments primarily based on industrial conclusions, is way more affordable. 

Within the ongoing negotiations, the Lee Jae Myung administration has caught to a few essential guiding rules: whether or not the investments are within the pursuits of each international locations, whether or not the investments go to commercially viable initiatives, and whether or not the influence to our monetary and international change markets is minimal. 

These are apparent rules to stick to for any sovereign nation. If the US’ last demand exceeds what we are able to deal with, we have to proceed to barter. We hope the Lee administration sticks to its rules.  

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