In Korea-U.S. investment negotiations with the U.S., the need for safeguards modeled on Japan’s case is highlighted
In negotiations over investment in the U.S., South Korea needs mechanisms to prevent profitability and permitting risks, as in Japan’s case. Check the key points to reduce project delays and additional costs by reviewing long-term PPAs and liability conditions.
It has been pointed out that, as South Korea and the U.S. are wrapping up negotiations on U.S. investments, the government should secure safeguards by referring to Japan’s case. The background is that, while the United States is emphasizing the speed of project execution, issues such as profitability, permits, and legal liability later emerged one after another in Japan, which had announced its investment plans first.
The government is scheduled to brief the National Assembly in private on the details of the U.S. investment negotiations on the 22nd. Although the talks are in the final coordination stage, it has not yet been confirmed how followup procedures, such as the U.S. president’s notice of project selection, will proceed.
Japan announced two rounds of U.S. investment projects worth about $109 billion in February and March this year, but afterward ran into setbacks in financing, project approval, and verification of electricity demand. There was also a case in which a U.S. federal appeals court ordered the cancellation and rehearing of approval for an offshore crude oil export terminal in Texas.
South Korea is reportedly seeking contractual assurances for participation in longterm power purchase agreements (PPAs) and in the supply of equipment and services, taking such circumstances into account. Experts say that rather than simply matching the U.S. side’s demand for speed, it is necessary to thoroughly confirm the conditions to prepare for project delays or additional costs.