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Ruling party submits US investment bill, locking in retroactive auto tariff cut
Korea Herald | English | News | Nov. 28, 2025 | Regulation
South Korea’s ruling Democratic Party has introduced a special bill to implement a $350 billion US investment pledge, aiming to secure a retroactive tariff cut on Korean automobiles and parts from 25 percent to 15 percent starting November 1. The bill, titled “Special Act on Managing Korea-US Strategic Investments,” was submitted to the National Assembly less than two weeks after a joint fact sheet and a memorandum of understanding were signed between South Korea and the US. The legislation establishes frameworks and procedures for strategic investments, including the creation of a Korea-US strategic investment fund and a temporary corporation to manage it.
The bill requires that investments stay within an annual remittance cap of $20 billion out of the $200 billion pledged for US strategic sectors, ensures projects recommended by the US are “commercially reasonable,” and encourages priority for Korean vendors and personnel where possible. The legislation covers both the $200 billion in US strategic sector investments and a $150 billion commitment to the US shipbuilding industry. South Korean economic officials have emphasized the strategic importance of the investment for the country’s future growth and global economic positioning, while the Ministry of Economy and Finance noted the bill eases uncertainty for Korean exporters.
Opposition lawmakers from the People Power Party have criticized the bill for its structural flaws, warning it could place a financial burden on taxpayers due to a provision requiring the government to cover any investment losses. They also challenged the vague standard of “commercially reasonable,” defined by the US Investment Committee’s good faith, and expressed concern over weakened requirements for Korean project management. The opposition is calling for full National Assembly ratification of the US investment plan, citing constitutional provisions requiring legislative consent for treaties imposing significant financial obligations. The ruling party, however, is pushing forward without a set timetable for deliberation, hoping for bipartisan cooperation to pass a more comprehensive bill.
Experts remain divided on whether the US investment arrangement requires legislative ratification. Some argue that ratification could limit South Korea’s negotiating flexibility and that the National Assembly’s role should focus on oversight rather than a binding approval process. The Lee administration has warned that ratifying the memorandum could tie South Korea to unfavorable clauses, such as the revenue-sharing formula with the US, potentially undermining the country’s interests.