Seoul, South Korea – South Korea’s parliament is expected to pass a special bill on Thursday to implement Seoul’s $350 billion investment commitments in strategic U.S. industries under a trade deal struck last year.
The law is designed to implement a trade agreement signed in November, under which South Korea agreed to invest $200 billion in U.S. strategic industries and $150 billion in shipbuilding-related cooperation in a package linked to Seoul receiving more favourable tariff terms.
The bill has bipartisan support and the National Assembly is expected to pass it in a plenary session on Thursday.
Its passage would create a state-backed investment corporation with 2 trillion won ($1.4 billion) in capital and a strategic investment fund.
The bill names shipbuilding, semiconductors, pharmaceuticals, critical minerals, energy, artificial intelligence and quantum computing as priority investment sectors, while additional sectors can be added by presidential decree.
A central provision requires U.S. investments to meet the principle of “commercial rationality,” meaning they must generate sufficient cash flow to cover principal and interest over their lifespan.
Exceptions are permitted when national security or supply chain stability is at stake, provided relevant South Korean parliamentary committees approve them.
South Korea’s Industry Minister will lead a joint U.S.-South Korea committee to assess proposed projects, while a Finance Minister-led committee will decide whether to advance them to a U.S. panel headed by the Secretary of Commerce, which can also propose projects.
TARIFF AND FX UNCERTAINTIES
In late January, U.S. President Donald Trump threatened to raise tariffs on South Korean goods, saying Seoul’s legislature had yet to enact the trade framework.
South Korean officials have said the trade deal remains valid despite a U.S. Supreme Court decision in February that struck down a large swath of Trump’s tariffs.
Officials in Seoul have, however, voiced concerns about the impact of U.S. investments on an already weak won currency and said that projects would be based on consideration of foreign exchange market conditions as well as commercial feasibility.
South Korea is also currently included in a broader U.S. Section 301 probe into excess industrial capacity, which the U.S. Trade Representative (USTR) said could lead to new tariffs on major trading partners.
