South Korea, U.S. clinch deal on details of investment pledge

The agreement was reached in time for President Lee Jae Myung's summit with U.S. President Donald Trump in the southeastern city of Gyeongju, following nearly three months of intense negotiations to narrow gaps on the details of the investment pledge.

"The US$350 billion investment pledge will consist of $200 billion in cash installments and $150 billion allocated for shipbuilding industry cooperation, with an annual cap set at $20 billion," Kim Yong-beom, presidential chief of staff for policy, told reporters.

"As the investments will be made in line with business progress within an annual limit of $20 billion, they will remain within a range the Korean foreign exchange market can absorb, thereby minimizing any impact on the market," he said.

Korean companies will lead the shipbuilding cooperation projects, including direct investment and loan guarantees, Kim said.

Under the finalized terms, U.S. "reciprocal" tariffs on Korean goods and sectoral duties on autos will fall from 25 percent to 15 percent as agreed in an initial deal in July.

Pharmaceutical and lumber products will be granted "most-favored nation treatment," while airplane parts, generic pharmaceuticals and natural resources not produced in the U.S. will be exempt from tariffs.

For semiconductors, tariff levels will be set no less favorable than those applied to Taiwan, South Korea's major competitor in the sector, Kim noted.

Seoul and Washington also agreed to incorporate "commercial rationality" into the memorandum of understanding (MOU) and to split profits equally until the investment amount is recovered.

South Korea additionally secured a safeguard clause, enabling further consultations if the U.S. seeks investments without proper committee review.

"Through this agreement, we expect to improve conditions for Korean companies entering the U.S. market and secure a more favorable export environment than other nations," Kim said. "We also anticipate that clarifying the specific scope and timing of tariff reductions will significantly reduce market uncertainty.

Kim said the MOU will require a special law on U.S. investment and ratification by the National Assembly for implementation, noting that the lower tariffs will be applied retroactively from the time the bill is submitted to parliament.

He added that the specific terms of the MOU are nearly finalized and that a fact sheet covering both the trade and security components of the agreement between Seoul and Washington will be released in the coming days.

Earlier, South Korea's President Lee Jae Myung's awarded Donald Trump with replica of ancient gold crown.