Containers are stacked at Pyeongtaek Port in Gyeonggi Province on Sunday. (Yonhap)
Containers are stacked at Pyeongtaek Port in Gyeonggi Province on Sunday. (Yonhap)

South Korea’s leading business groups on Tuesday urged the National Assembly to swiftly pass a special bill to implement Korea’s $350 billion investment pledge to the US, warning that delayed legislation could weaken Seoul’s leverage in trade talks and heighten tariff risks.

In a joint statement, six major business lobbies — the Federation of Korean Industries, the Korean Chamber of Commerce and Industry, the Korea International Trade Association, the Korea Enterprises Federation, the Korea Federation of SMEs and the Federation of Middle Market Enterprises — called on lawmakers to approve the pending “Special Act on Managing Korea-US Strategic Investments.”

They called for the bill to be passed before Monday, when the activity period for a parliamentary special committee tasked with fast-tracking the legislation expires.

“The longer the ‘Special Act on Managing Korea-US Strategic Investments’ is delayed, the more South Korea’s negotiating power with the US will weaken, making it difficult to realize the tangible benefits of bilateral economic cooperation,” the business groups said. “We earnestly urge the National Assembly to pass the bill within the special committee’s activity period so that our companies can minimize trade risks and actively expand exports to the US."

The urgency of the legislation was highlighted in January when US President Donald Trump took aim at South Korea’s failure to pass the special bill and threatened to raise "reciprocal" tariffs on Korean goods back to 25 percent from 15 percent — the level agreed upon under the bilateral trade deal.

A bipartisan parliamentary special committee was formed in early February to handle the bill, with the aim of passing it before the Monday deadline. The legislation, which covers the framework, procedures and scope of Seoul's planned $350 billion investment, was introduced by the ruling Democratic Party in November. However, ongoing political tensions have slowed progress in deliberations, escalating uncertainties over its passage.

Further compounding uncertainty, the US Supreme Court on Feb. 20 struck down Trump’s "reciprocal" tariffs imposed on nearly all trading partners, including South Korea, as unlawful. The court ruled that the 1977 International Emergency Economic Powers Act, which Trump invoked to levy the tariffs, does not grant the president authority to impose such measures, effectively dismantling the legal foundation for the reciprocal tariffs.

South Korean goods had been subject to a 15 percent tariff, reduced from the previous 25 percent, after two countries reached a bilateral agreement following a series of negotiations. Under the deal reached late last year, Seoul pledged to invest $350 billion in the US in return for the tariff reduction.

With the reciprocal tariffs now ruled illegal, the decision has cast doubt on the durabiility of the trade agreement between Washington and Seoul.

Business leaders warned that despite the ruling, Washington could pursue alternative legal measures to maintain its overall tariff policy, or impose selective duties on specific countries or products.

“Key Korean industries such as semiconductors, automobiles and pharmaceuticals could face direct impacts on export to the US, raising concern about a decline in industrial competitiveness,” the joint statement said.


sahn@heraldcorp.com