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by IANS |
Seoul, Nov 14 (IANS) South Korea and the United States have signed a memorandum of understanding (MoU) on Seoul's $350 billion investment pledge made in return for the lowering of U.S. tariffs, the industry ministry said on Friday.
The MoU was electronically signed by South Korean Industry Minister Kim Jung-kwan and U.S. Commerce Secretary Howard Lutnick, according to the Ministry of Trade, Industry and Resources.
On October 29, the two sides reached an agreement on the details of Seoul's $350 billion investment pledge made in exchange for lower U.S. tariffs, reports Yonhap news agency.
Under the final terms, the investment will consist of $200 billion in cash installments, with an annual cap set at $20 billion, and an additional $150 billion for bilateral shipbuilding cooperation.
The U.S. has lowered reciprocal tariffs for Korea to 15 percent from 25 percent as of Aug. 7, and plans to cut tariffs on Korean cars and lumbers also to 15 percent, the industry minister said in a press briefing.
Korean pharmaceutical products will also face a tariff rate no greater than 15 percent, with semiconductors to be subject to tariff rates "no less favorable" than those applied to competitors, such as Taiwan.
The MOU on the envisioned investment stipulates that the two countries will select projects to be funded by Seoul's $200 billion package before U.S. President Donald Trump's term ends in January 2029, according to Kim.
The $200 billion will be funneled into "commercially reasonable" projects related to advanced industries outlined in a joint fact sheet released by both Seoul and Washington earlier in the day. Such sectors include energy, semiconductor, pharmaceuticals, critical minerals, artificial intelligence and quantum computing, among others.
Kim said the two countries will establish a Consultation Committee, headed by Korea's industry minister, and an Investment Committee, headed by the U.S. commerce secretary, that will look over a special purpose vehicle (SPV) to be formed by the U.S. side to manage their joint projects.
The umbrella SPV will have oversight over smaller SPVs for individual projects, which will each have a Korean project manager, if possible, he explained.
The deal also stipulates that the U.S. should give priority to South Korean firms when selecting vendors or suppliers for such projects, according to Kim.
In detail, the MOU states that the U.S. will from time-to-time present investment projects to Korea for review, and Korea, should it decide to invest, will fund the projects within 45 business days.
Regarding profit distribution, the U.S. and Korea will divide the profit from their joint projects 50-50 until an aggregate amount equal to the deemed allocation amount has been distributed to each, and thereafter, 90 percent of the profit will go to the U.S. and the remaining 10 percent to Korea.
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