South Korea, US trade talks deadlocked over foreign exchange issues

South Korea’s negotiations to finalize a US trade deal are being held up due to foreign exchange issues and Seoul has asked Washington to help find a way to cap any market impact from a $350 billion investment package, a senior presidential official said on Tuesday.

The delay in striking a final deal comes after US President Donald Trump last week signed an executive order to implement Japan’s trade deal, which includes a $550 billion investment package.

South Korea is yet to reach a written agreement on its deal, which was struck in July and includes a $350 billion package.

Presidential Policy Secretary Kim Yong-beom said that Japan and South Korea were in a different situation.

“While there is not much difference in trade surpluses, the size of the economy, more importantly foreign exchange market conditions are very different,” Kim told a live discussion forum.

Kim said the most important matter that needed to be addressed for South Korea to sign any agreement on the investment package was the impact it would have on the domestic dollar-won currency market.

South Korea was in a different position to Japan because the yen is an international currency, while Japan also has a currency swap program and foreign exchange reserves that are three times larger than South Korea’s that would help cap the impact of its $550 billion investment in the US, he said.