U.S. Secretary of Commerce Howard Lutnick. AFP Yonhap News. 

U.S. Secretary of Commerce Howard Lutnick pressed South Korea on the 11th (local time) regarding the current deadlock in bilateral tariff and trade negotiations, stating that Korea must either accept the agreement as outlined in the broad framework or face tariffs at pre-agreement levels.

In an interview with CNBC that day, Secretary Lutnick said, "Korea did not sign when President (Lee Jae-myung) visited (Washington). He came to the White House, and he knows that we did not discuss trade because he did not sign the document."

Lutnick added, "I think they are looking at Japan right now. So there is no flexibility," noting that "Japan signed the contract."

He further emphasized, "Korea needs to accept the agreement or pay the tariffs. It is clear. Either pay the tariffs or accept the agreement."

This is interpreted as pressure for South Korea to accept the U.S. terms regarding the bilateral trade deal, which was reached in broad terms on July 30 but has since faced disagreements over details such as South Korea’s investment funds in the U.S.

If South Korea does not accept, the implication is that the country-specific tariffs (so-called reciprocal tariffs) will rise to the originally planned 25% rather than the current 15% rate reduced under the trade agreement.

Currently, negotiations for the final conclusion of the Korea-U.S. trade agreement are reportedly facing difficulties due to significant differences regarding the structure of South Korea’s $350 billion (approximately 486 trillion won) investment package in the U.S., the method of deciding those investments, and the distribution of investment profits.

A South Korean working-level delegation met with officials from the U.S. Department of Commerce and the Office of the U.S. Trade Representative (USTR) on the 8th but failed to reach an agreement. Minister of Trade, Industry and Energy Kim Jung-kwan arrived in the U.S. on this day to continue discussions with Secretary Lutnick and others.

President Lee also stated during his 100-day press conference, "We have quite a long way to go in negotiations," adding, "If it's a good deal, we should sign it, but why sign something that isn't beneficial? We must try to at least sign a reasonable agreement. Please don't criticize me for not signing yet."

In this context, Secretary Lutnick explained the method for the $550 billion investment in the agreement with Japan, citing an Alaska liquefied natural gas (LNG) pipeline construction project as an example.

He said, "When the president approves, we hire construction workers and ask Japan for capital. They send the money, and we build the pipeline," adding, "Once cash flow begins, the U.S. and Japanese governments split profits 50-50 until Japan recovers its investment. The U.S. generates $550 billion, and after that, the U.S. takes 90% of the profits."

In the interview, Secretary Lutnick projected that trade agreements with various partners would lead to over $10 trillion (approximately 1경 3,900 trillion won) in factory construction across the U.S., pushing U.S. construction employment to an all-time high in the first quarter of next year and driving U.S. GDP growth above 4% next year.

When asked if the recent detention and arrest of Korean workers at a Hyundai Motor Group-LG Energy Solution joint battery plant construction site would impact the availability of sufficient labor for such construction, he did not provide a clear answer.

Instead, Secretary Lutnick said, "We need vocational schools and community colleges. State universities also need to start (vocational) training programs," adding, "That is why President Trump is in a debate with Harvard University, and if Harvard agrees with Trump, we will have them build a vocational school."

Regarding the issue of visas for foreign skilled workers raised by the recent detention of Korean nationals, Secretary Lutnick said, "President Trump will step in and solve it," adding, "He knows that to build a great factory, you need the leadership of people who have built such factories before."

He also stated, "I believe President Trump will enter into agreements with many countries to find ways for their workers to receive appropriate short-term work visas when they intend to build large-scale factories in the U.S., while also ensuring they train Americans before returning home," adding, "Trump will present an 'ABC' principle: A for enter, B for train Americans, and C for return home."

Yonhap News