US President Donald Trump is scheduled to reach South Korea on Wednesday as part of his five-day tour of Asia and he has two clear priorities.
The first is for the South Korean government to finalize a $350 billion (€300 billion) investment package in the US and the second is to arrange another face-to-face meeting with North Korean leader Kim Jong Un.
After successful visits to Malaysia and Japan, where Trump signed beneficial trade and security deals, analysts say his trip to South Korea is likely to make it more difficult to achieve his maximalist ambitions.
$350 billion impasse
The South Korean administration of President Lee Jae-myung is sticking to a massive investment package it is demanding in exchange for reductions in US tariffs on Korean imports.
South Korean officials said the bulk of the $350 billion investment is earmarked for loans and loan guarantees to South Korean companies setting up new facilities in the United States.
However, Trump wants Seoul to pay the total amount “upfront” in cash or equity. Li said such a cash outlay would destabilize the country’s financial markets, putting the investment deal in doubt.
A wonderful South Korean welcome
Trump may not get a warm welcome from the people of South Korea.
Several demonstrations have taken place outside the US Embassy in central Seoul over the past few days. Some South Koreans also feel that their country is being emboldened by trade deals and fear that Trump could once again threaten to withdraw US troops if his demands are not met.
There is still outrage over a US Immigration and Customs Enforcement (ICE) raid on a Hyundai plant in the US state of Georgia in September. More than 300 South Korean workers were detained before being returned to Seoul.
Since the ICE raid on a South Korean carmaker, South Korean Foreign Minister Cho Hyun told reporters on Friday that Seoul and Washington have agreed to set up a working group to create a new visa category for future South Korean investment projects.
South Koreans question cost of US alliance
“For many South Koreans, the United States has long been considered the country’s most important security partner,” said Hyobin Lee, a professor at Sogang University in Seoul.
“However, under the Trump administration, there is a widespread perception that the alliance is being leveraged for one-sided economic gain.”
“The idea that South Korea should invest massively to avoid being harmed by US tariffs is taken by many as a feeling of betrayal,” he told DW.
Washington and Seoul have said they are narrowing their differences over a $350 billion investment package in return for the US demanding a reduction in tariffs to 15% from the current 25%.
In an interview with Bloomberg, Li said several key points remain, including the amount of investment, the timeline, the method of investment and how losses and profits will be shared.
“The United States will of course try to maximize its interests, but it should not be to the extent that it has disastrous consequences for South Korea,” Lee said.
Kim Sang-woo, a former politician in the leftist South Korean Congress for New Politics and now a board member of the Kim Dae-jung Peace Foundation, says the US demand is widely seen as “huge”.
He said, “The US is asking Korea to do most of the investment in the form of cash, while Seoul wants it in the form of credit, but this total is only about 6.5% of our total GDP and if Korea agrees to this it could have a huge negative impact on our financial stability.”
Security in Northeast Asia
Lee is scheduled to host Trump for a bilateral summit on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in the South Korean city of Gyeongju.
However, on Monday, aboard Air Force One flying from Malaysia to Japan, Trump indicated he hoped to rekindle the “bromance” of his first term in the White House with Kim Jong Un.
“If he would like to meet, I would love to meet with him,” Trump told reporters. He made a similar offer on Friday, saying, “I’ve put it out on the Internet that I’m coming to South Korea and if he would like to meet, I’m open to it.”
Analysts say it is impossible to determine whether the meeting will go ahead because both men are unpredictable and spontaneous but there have been no positive signals from Pyongyang.
Trump and Kim last met in June 2019 at Panmunjom village on the North-South border. Their first meeting in Singapore in June 2018 was positive, but relations deteriorated badly after talks in Hanoi failed in February 2019.
Meanwhile, Kim has signed a military and trade alliance with Russia, allowing North Korea to face multiple shortages of fuel, food and other necessities due to international sanctions on the regime.
Kim Sang-woo said, “It’s always possible that they could meet, but I see Kim trying to get as much out of Trump as he can if they meet.”
“On the other hand, Trump is looking to promote the spectacle of meeting Kim rather than offer anything concrete. I don’t think that will be enough to persuade Kim.”
South Korea ‘has changed’
Lee of Sogang University said the U.S. administration needs to understand that South Korea’s political leadership “has changed,” especially when it comes to trade.
“The current administration is expected to take the negotiations forward in a more assertive and confident manner,” he said.
Lee said Trump “may hope to conclude a major investment agreement to strengthen his reputation as a skilled negotiator,” adding that the South Korean government is expected to negotiate pragmatically while prioritizing economic interests and strategic autonomy.
“Whether an agreement is reached will depend on whether the terms are mutually beneficial rather than considered one-sided.”
Edited by: Keith Walker