GYEONGJU, North Gyeongsang Province — The leaders of South Korea and the United States achieved a top-level breakthrough in months of drawn-out tariff negotiations, moving to finalize the terms of Seoul's $350 billion investment framework.
US President Donald Trump said after the 87-minute summit that he and South Korean President Lee Jae Myung had reached a trade deal.
“We did,” Trump told reporters at a dinner hosted by Lee when asked if an agreement had been reached, without offering further details.
Lee and Trump held their second summit in two months on Wednesday at the Gyeongju National Museum in Gyeongju, North Gyeongsang Province, on the sidelines of the APEC summit, with a packed agenda centered on two main axes: trade and security.
The second meeting carried added significance as attention gravitated toward whether the summit would produce a formal, written outcome in the areas of security and trade — something the allies failed to achieve during the first Trump-Lee summit in Washington on Aug. 25.
Since then, Seoul and Washington have intensified efforts through working-level discussions to formalize their understandings on trade and security into a single document — either in the form of a fact sheet or a joint statement — to be issued following the second summit.
The key challenge to issuing a joint statement lies in the fact that the allies are still engaged in follow-up negotiations to narrow their differences on the framework of South Korea’s $350 billion investment package in the US.
The allies have been working to bridge their remaining gaps, mainly over the proportion of cash investment, the installment period for those cash payments, and the profit-sharing arrangements between Seoul and Washington from such investment.
Washington’s original demand was for South Korea to contribute the full amount as an upfront payment, while Seoul has sought to reduce the cash portion out of concern that it could destabilize the foreign exchange market.
During the luncheon summit, the two leaders also discussed security issues, Washington's initiative to"modernize" the alliance and broader discussions on how to comprehensively deepen the alliance to advance peace on the Korean Peninsula.
As the two leaders sat down, Lee pledged to increase the country’s defense budget while calling on the US to grant permission for Seoul to obtain fuel for nuclear-powered submarines.
“I believe that the Korea-US relationship should continue to advance through alliance modernization toward a future-oriented comprehensive strategic alliance," Lee told Trump in his opening remarks during a summit that also served as a luncheon.
"To help ease the US defense burden, I would like to emphasize that South Korea will firmly move forward with increasing its defense budget and supporting its defense industry.”
As part of South Korea’s initiative to bolster its defense capabilities, Lee called on Trump to “make a determination to permit (South Korea) to obtain fuel for nuclear-powered submarines.”
Lee explained that South Korea's current"diesel submarines have limited submerged endurance, which constrains their ability to track North Korean and Chinese submarines."
"If fuel supply were permitted, we could, using our own technology, construct multiple conventionally armed submarines and carry out maritime defense operations in the East and West Seas around the peninsula — a step that would substantially reduce the operational burden on US forces," Lee told Trump.
The question of acquiring fuel for nuclear-powered submarines is tied to revising the current civil nuclear cooperation agreement between Seoul and Washington. Seoul is only permitted to enrich uranium to a level below 20 percent with a US approval, while independent reprocessing of spent fuel remains prohibited under the agreement.
Since nuclear-powered submarines require highly enriched uranium, moving forward with the plan to develop such submarines would require US consent either through exemptions or alternative arrangements.
Lee also asked Trump to jumpstart negotiations to revise the nuclear agreement.
“I would ask that you instruct officials to advance substantive consultations so these matters can be resolved more quickly," Lee said.
During the summit, Lee and Trump also touched on North Korean leader Kim Jong-un’s continued silence in response to Trump’s repeated overtures to meet during his visit to South Korea.
“Chairman Kim Jong-un was unable to fully accept and understand President Trump’s genuine intentions, so the talks fell through,” Lee told Trump. “However, I believe that this too will become another seed — a starting point that will create a great wave of peace on the Korean Peninsula.”
Lee reaffirmed his pledge to “faithfully play the role of a peacemaker who creates the conditions” for Trump to achieve peace on the Korean Peninsula, echoing his remarks during their first summit.
In response, Trump said he remains committed to making efforts to resolve the North Korean issue, explaining that he and Kim “really weren’t able to work out the timing.”
"I will say this, that the Korean Peninsula, and I know you are officially at war, but we will see what we can do to get that all straightened out," he said.
"But we’ll have other visits, and we’ll work very hard with Kim Jong-un and with everybody on getting things straightened out, because that makes sense."
"I have a couple of phrases that I like. One of them is 'common sense.' It’s common sense that that should work out, and I feel certain that it will. It may take a little time — you have to have a little patience — but I feel absolutely certain that it will."
Hours before Trump arrived in South Korea, North Korean state media reported that the country had test-fired sea-to-surface strategic cruise missiles Tuesday, reaffirming the country’s plan to “put nuclear forces into practice.”
