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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Welcome to the Daybreak Asia podcast. I'm Dan Schwartzman. Doug

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Speaker 2: Prisoner's off this week. The Asia Pacific Economic Cooperation Summit

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Speaker 2: is scheduled for next week. In South Korea, President Trump

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Speaker 2: is expected to meet with South Korean President Lee JM

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Speaker 2: Young and Chinese President Shijinping for separate bilateral talks that

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Speaker 2: may shape trade relations for years to come in the state.

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Speaker 2: Senior South Korean officials visited Washington today to rezoome trade negotiations.

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Speaker 2: To bridge your differences over Soul's three hundred and fifty

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Speaker 2: billion dollar investment pledge under a bilateral trade deal struck

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Speaker 2: in July. For more on what's ahead at the APEX summit,

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Speaker 2: we heard from Kang Kyung Hua, South Korean Ambassador to

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Speaker 2: the United States. She spoke to Bloomberg's Joe Matthew and

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Speaker 2: Julie Fine on balance of power.

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Speaker 3: Madam Ambassador, is great to see you. Thank you for

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Speaker 3: being with us on Bloomberg.

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Speaker 1: Of course, thanks so much.

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Speaker 3: We can talk about with a pretty wide ranging agen

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Speaker 3: for the summit next week. We're spending so much time

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Speaker 3: in America talking about whether Trump and she will have

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Speaker 3: a productive meeting, whether they'll sit down at all when

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Speaker 3: in fact, I'm curious about your relationship with the United

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Speaker 3: States and the extent to which this summit will help

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Speaker 3: to codify the framework trade agreement that you've already made.

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Speaker 4: Well, we're very happy that the President will be coming

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Speaker 4: to quang Ju during the APEX summit week. We very

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Speaker 4: much expect the two presidents, my President and President Trump

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Speaker 4: to have a very productive second summit meeting. They had

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Speaker 4: a wonderful first on October twenty fifth here in Washington,

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Speaker 4: so you know a lot of follow up discussions have

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Speaker 4: been taking place since then, on both the security side

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Speaker 4: and of course on the trade side on the investment package.

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Speaker 4: In fact, the two principal players on our part on

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Speaker 4: the investment package are in town. I think they're talking still.

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Speaker 4: If not, the talk is over with mister, and you know,

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Speaker 4: trying to nail down the remaining points of disagreement between

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Speaker 4: the two sides. So lots of movement, but both on

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Speaker 4: the trade side and on the security side. But the

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Speaker 4: goal is for the seven decades old alliance to move

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Speaker 4: towards the future. I mean, so much has changed. The

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Speaker 4: global security environment is changing and we want to adapt

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Speaker 4: and stay ahead of the challenges so that we grow

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Speaker 4: the alliance into a future oriented, comprehensive and strategic partners

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Speaker 4: not just on security but economic alliance, but also a

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Speaker 4: technology alliance.

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Speaker 5: When you take the wide eye view, what is the

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Speaker 5: best outcome from APEC in terms of tariffs that so

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Speaker 5: many nations have been struggling with when it comes to

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Speaker 5: the United States figuring out exactly how to get.

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Speaker 4: That right, I think APEC is a year long process.

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Speaker 4: So yes, it culminates with that summit week next week.

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Speaker 4: In fact, there are a whole series of senior officials meetings,

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Speaker 4: ministerial meetings on the trade side. There was a meeting

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Speaker 4: of the trade ministers of the twenty one economies and

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Speaker 4: this included mister Greer from the US side, and they've

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Speaker 4: come up with a joint statement I believe it was

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Speaker 4: called committing the economies to providing a trading and in

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Speaker 4: the environment that is transparent, predictable and business friendly. So

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Speaker 4: that discussion, I think was a very encouraging one. That, yes,

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Speaker 4: as challenging as these tariff issues are at a bilateral level,

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Speaker 4: there is a commitment to moving forward a joint direction

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Speaker 4: for the environment for the ministers to make it more

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Speaker 4: more transparent, predictable and friendly for businesses.

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Speaker 3: Speaking of being friendly for businesses, we recall what took

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Speaker 3: place in September in Georgia at the Hyundai plants following

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Speaker 3: the immigration raid there, some five hundred workers were detained,

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Speaker 3: and this was obviously a very difficult spot for our

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Speaker 3: relationship with South Korea. I don't know to what extent

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Speaker 3: you helped to broker the exit at that time, but

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Speaker 3: I wonder when you consider the investment pledge that you're describing,

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Speaker 3: has there been any guarantee that this will not take

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Speaker 3: place again as part of this well invesment pledge.

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Speaker 4: The two sides have really quickly responded, both my government

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Speaker 4: and US counterparts, and we've established a working group that

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Speaker 4: have worked through these issues for some quick fixes as

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Speaker 4: well as some issues on the longer horizon. The working

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Speaker 4: group has met once, and I think in fact just

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Speaker 4: yesterday evening for the second time. We have clarified what

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Speaker 4: can be done with a B one visa which and

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Speaker 4: the ESTA entry entry Permit UH and the what the

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Speaker 4: Korean investors and the workers who come with these investments

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Speaker 4: is clarity as to what they can do, and much

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Speaker 4: of the discussions have been about bringing that clarity that

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Speaker 4: has now gone up on the website of the US

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Speaker 4: Embassy in Korea. A desk dedicated to investors and workers

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Speaker 4: going to the United States will be established within the

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Speaker 4: US Embassy for a fast track processing of visa requirements

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Speaker 4: from these workers. So very you know, very already visible progress.

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Speaker 4: UH Korean workers are already coming in and we will

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Speaker 4: continue these discussions. But in the longer term for the investors,

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Speaker 4: of course, they want assurances, longer term assurances that they

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Speaker 4: can send their workers and come in and and do

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Speaker 4: the work that's required to install, to maintain and make

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Speaker 4: sure that the what's invested is up and running.

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Speaker 3: Are skilled worker visa's worth one hundred thousand dollars for

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Speaker 3: a company like Hyundai? Are you talking about that?

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Speaker 4: We're not talking about the H one B visas. We're

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Speaker 4: talking about you know, more much more short term work visas.

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Speaker 4: And I think the B one visa with the clarification

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Speaker 4: will go a long way in addressing that. But we

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Speaker 4: very much want you know, there's been a legislation in

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Speaker 4: Congress for many over twelve years now of a specific

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Speaker 4: epour visa quota for Korean workers coming in. That would

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Speaker 4: certainly be a longer term solution and give the assurance

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Speaker 4: to the investors.

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Speaker 5: Do you think that investors will be deterred at this

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Speaker 5: point until they have those assurances. Do you think it'll

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Speaker 5: keep them from really wanting to put more money here?

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Speaker 4: Well, I think the commitment of my government and certainly

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Speaker 4: the my counterparts, both in the White House and the

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Speaker 4: State Department, they are very committed. They we all realize

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Speaker 4: that this should not have happened, and we need to

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Speaker 4: move beyond this and give the investors assurances that they

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Speaker 4: can commit to the United States. I think the government

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Speaker 4: can give as much assurance as we can, and we

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Speaker 4: are my American counterparts are doing the same. In the end,

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Speaker 4: it's a business decision, and you know, you know, working

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Speaker 4: towards a three hundred and fifty billion dollar investment package. Yes,

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Speaker 4: I think they have every every need and right to

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Speaker 4: demand that assurance and reliability of the entry procedures and

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Speaker 4: the ability to work here.

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Speaker 3: So what extent has China made overshures to your government

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Speaker 3: in terms of an economic relationship, in terms of maybe

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Speaker 3: finding alternatives to US investment.

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Speaker 4: Well, I'm not part of the discussion on that bilateral front.

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Speaker 4: But the latest news has been the announcement of their

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Speaker 4: sanctions on the five entities of a big Korean ship

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Speaker 4: builder in the United States, and we're seeing what the

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Speaker 4: implications of this is mean for that company in particular,

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Speaker 4: but for the overall overall investment. I think it's a

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Speaker 4: it's a it's a concern. Of course, any any sanctions

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Speaker 4: from any significant economic power is something to be taken

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Speaker 4: very seriously. So I understand that Soul is in discussion

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Speaker 4: with Beijing about the direct implications of that. And beyond that,

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Speaker 4: I mean, China is a very important partner to us economically.

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Speaker 4: I mean it's a very close neighbor geographically, and we've

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Speaker 4: been building close relationship with China for decades and we

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Speaker 4: intend to continue to do that.

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Speaker 2: That was Kan kyong Hwa, South Korean Ambassador to the US,

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Speaker 2: speaking to Bloomberg's Joe Matthew and Julie Fine. Coming up,

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Speaker 2: we'll hear from South Korea Finance Minister Ku Jung Chul

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Speaker 2: from the sidelines of the APEC Finance ministers meeting in

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Speaker 2: South Korea. Welcome back to the Daybreak Asia podcast. I'm

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Speaker 2: Dan Schwartzman. Doug prisoners off this week. As mentioned earlier,

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Speaker 2: South Korea and the US are working on finalizing details

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Speaker 2: over their tariff framework. Soul and Washington are focusing on

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Speaker 2: the structure of a three hundred and fifty billion dollar

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Speaker 2: investment pledge rather than a currency swap. That's according to

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Speaker 2: Finance Minister Ku Jung Chol. Ku spoke exclusively to Bloomberg's

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Speaker 2: Sharry On from the sidelines of the APEC Finance Minister's

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Speaker 2: meeting in South Korea.

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Speaker 1: We understand that the US Investment Fund has been very

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Speaker 1: difficult to agree on the details, and you've told Secretary

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Speaker 1: best sent about the feasibility of having so much cash upfront.

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Speaker 1: Should we be expecting installments in payments?

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Speaker 2: Then, to Kohngolan.

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Speaker 6: Pasant has understood that due to the current state of

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Speaker 6: Korea's foreign exchange market, we cannot pay upfront. He understands that, however,

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Speaker 6: regarding how to proceed on this with negotiations currently underway

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Speaker 6: with the US, I ask for your understanding that I

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Speaker 6: cannot yet provide specific details on the plan.

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Speaker 1: Bank of Korea Governor Etanyon said that the maximum amount

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Speaker 1: that can be raised in dollars annually without market disruptions

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Speaker 1: is twenty billion dollars? Are we looking at around those

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Speaker 1: figures right now? I tell you the miximum.

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Speaker 6: Yes, the Bank of Korea currently estimates that the maximum

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Speaker 6: amount we can raise without significantly impacting the foreign exchange

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Speaker 6: market is twenty billion dollars.

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Speaker 1: What does that mean for upfront payments? Though? Does that

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Speaker 1: mean front loading some and then paying annually?

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Speaker 6: Regarding that aspect, we are keeping various possibilities open for

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Speaker 6: the foreign exchange market and are currently in negotiations with

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Speaker 6: the United States today.

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Speaker 1: Yes, that's one of the options that you've talked to

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Speaker 1: Secretary Basent and to Washington about.

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Speaker 6: Oh Hyaman, I cannot confirm that at this time. However,

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Speaker 6: Secretary Bestent fully understands the difficulties in Korea's FX market

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Speaker 6: and as having internal discussions on how to respond to

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Speaker 6: the situation.

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Speaker 1: Because of the potential financial shocks to South Korea. There

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Speaker 1: was a lot of talk about a potential currency swap agreement.

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Speaker 1: Is that still on the table.

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Speaker 6: Whether a currency swap is needed and to what extent

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Speaker 6: will depend entirely on how the deal is structured. It

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Speaker 6: may not be necessary at all, or it could be

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Speaker 6: arranged on a smaller scale. Therefore, the currency swap itself

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Speaker 6: is a necessary condition, not a sufficient one. So depending

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Speaker 6: on how this deal turns out, we plan to consult

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Speaker 6: with the US regarding the currency swap aspect as well.

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Speaker 4: TWA sabby.

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Speaker 6: Even if we have a currency swap, it will be

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Speaker 6: difficult to just blindly provide money to the US without

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Speaker 6: considering ring the commercial rationality or viability of the project

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Speaker 6: being selected.

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Speaker 1: I'm understanding then that this option is still alive. If

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Speaker 1: that's the case, when it comes to perhaps the structure,

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Speaker 1: could it be something similar as to the Argentina style,

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Speaker 1: going through the treasury instead of directly from the FED to.

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Speaker 6: What Regarding the currency swap, We're not doing it because

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Speaker 6: we lack short term foreign reserves like Argentina. It's a

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Speaker 6: situation where Korea needs foreign currency to make long term

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Speaker 6: investments as requested by the US, so the US must

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Speaker 6: provide the lack of foreign currency therefore, it doesn't align

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Speaker 6: with the conventional short term currency swap structure. So regarding

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Speaker 6: that aspect, if we were to engage in a currency

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Speaker 6: swap arrangement with the US, there are further points that

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Speaker 6: require discussions.

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Speaker 1: The South Korean one A fourteen hundred per dollar. Is

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Speaker 1: that the new normal? Do you think that reflects fundamentals?

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Speaker 6: We believe much of the recent depreciation reflects market concern

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Speaker 6: that the tariff negotiations haven't been finalized, So we are

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Speaker 6: currently pursuing negotiations with the US with inter range that

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Speaker 6: doesn't significantly impact Korea's foreign exchange market. Fortunately, US Treasury

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Speaker 6: Secretary Besant is fully aware of the situation in Korea's

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Speaker 6: foreign exchange market. Therefore, once the issue is resolved, that

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Speaker 6: uncertainty will likely fade.

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Speaker 1: We have seen clearly the impact on South Korean automakers

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Speaker 1: because the tariffs continue to be, of course, much higher

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Speaker 1: than for Japan for Europe, who already the US has

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Speaker 1: lifted those levees. What can the government do at this

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Speaker 1: point to support the sector.

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Speaker 6: In the short term, The government is providing all possible

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Speaker 6: policy support to automakers and auto parts companies facing difficulties

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Speaker 6: due to these higher tariffs compared to the EU and Japan.

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Speaker 6: We believe that if these negotiations yield some breakthrough, those

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Speaker 6: issues could also be resolved.

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Speaker 1: In these ongoing trade negotiations is the fact that South

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Speaker 1: Korea would lose its advantage over say Japan before the

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Speaker 1: trade deal. Because Korea have a free trade agreement with

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Speaker 1: the US, it had an advantage of around two point

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Speaker 1: five percent. Is that being discussed at this point?

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Speaker 6: I conveyed that point to President Trump and explained to

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Speaker 6: Bessent and Lutnik. I explained that since Korea is an

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Speaker 6: FTA partner, tariffs on Korea are already sufficiently low, but

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Speaker 6: tariffs on other countries aren't sufficiently low, making it unfair.

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Speaker 6: Even so, it seems the US isn't very willing to

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Speaker 6: understand that aspect. In any case, we plan to continue

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Speaker 6: explaining and persuading them.

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Speaker 1: Because of the exuberance around the artificial intelligence, we are

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Speaker 1: seeing South Korea stock market on a tear. Are you

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Speaker 1: concerned that this could be a market bubble?

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Speaker 2: The two metrizon hanguk dekide.

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Speaker 6: The current stock market reflects expectations for the Korean economy,

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Speaker 6: such as enhancing shareholder value in the Korean capital market,

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Speaker 6: expanding dividends or resolving unfair practices, expectations for the modernization

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Speaker 6: of the Korean stock market. On top of these expectations,

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Speaker 6: we are actively supporting the core technology economy to ensure

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Speaker 6: a robust Korean economy that can be a global investment destination.

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Speaker 2: That was South Korea Finance Minister Ku Jung Chol speaking

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Speaker 2: through a translator to Bloomberg Scherryon from the sidelines of

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Speaker 2: the APEC Finance Minister's meeting in South Korea.

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Speaker 4: Thanks for listening to today's episode of the Bloomberg Daybreak

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Speaker 4: Asia Edition podcast.

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Speaker 5: Each weekday, we look at the story shaping markets, finance,

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Speaker 5: and geopolitics in the Asia Pacific. You can find us

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Speaker 5: on Apple, Spotify, Hey, the Bloomberg Podcast YouTube channel, or

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Speaker 5: anywhere else you listen.

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Speaker 1: Join us again tomorrow for insight on the market moves

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Speaker 1: from Hong Kong to Singapore and Australia. I'm Doug Prisoner

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Speaker 1: and this is Bloomberg