Seoul: South Korea will "temporarily" establish a strategic investment corporation to manage a special fund for the country's $350 billion investment in the United States, as part of a bilateral tariff agreement finalized last month, the government announced Wednesday. The corporation, tentatively named Korea-U.S. Strategic Investment Corp., will operate for a maximum of 20 years under a special bill submitted by the ruling Democratic Party to support Seoul's investment plans in the U.S., as stated by the finance and industry ministries in a joint press release.
According to Yonhap News Agency, the government plans to submit the bill this month, following the agreement between President Lee Jae Myung and U.S. President Donald Trump, which was concluded during their summit in Gyeongju on October 29. The investment promise, made in exchange for reduced U.S. tariffs, will include $200 billion in cash installments, capped annually at $20 billion, and an additional $150 billion allocated for bilateral shipbuilding cooperation.
In return, the U.S. administration has agreed to lower the 25 percent tariffs on Korean automobiles to 15 percent, with the reduction being applied retroactively from the start of the month when the bill is submitted. Following the bill's submission, Industry Minister Kim Jung-kwan formally notified U.S. Commerce Secretary Howard Lutnick of the move and urged the U.S. to promptly publish the retroactive tariff reduction on Korean cars in its Federal Register.
The investment corporation will be established with government funding and will be responsible for creating, managing, and operating the Korea-U.S. strategic investment fund. The fund's resources will be sourced from earnings on foreign exchange reserves entrusted by the government and the Bank of Korea, as well as through the issuance of government-guaranteed bonds overseas.
The government emphasized that the special bill mandates compliance with safeguard measures specified in the memorandum of understanding (MOU) on the investment pledge, signed by both countries. These measures include a $20 billion annual cap on investments, adjustments to the investment amount and timing to prevent instability in Korea's foreign exchange market, and the selection of "commercially reasonable" projects.
Under the MOU, a Consultation Committee led by Korea's industry minister and an Investment Committee headed by the U.S. commerce secretary will be established. These committees will oversee a special purpose vehicle (SPV) created by the U.S. side to manage joint projects.