Lee sees danger in US investment demand

$350bn investment is main trade obstacle

- JOSH SMITH HYUNJOO JIN HEEJUNG JUNG

(REUTERS)

South Korea's economy could fall into crisis rivalling its 1997 meltdown if the government accepts current US demands in stalled trade talks without safeguards, President Lee Jae Myung told Reuters.

Seoul and Washington verbally agreed to a trade deal in July in which the US would lower President Donald Trump's tariffs on South Korean goods in exchange for $350 billion in investment from South Korea, among other measures.

They have yet to put the agreement to paper because of disputes over how the investments would be handled, Mr Lee said.

"Without a currency swap, if we were to withdraw $350 billion in the manner that the US is demanding and to invest this all in cash in the US, South Korea would face a situation as it had in the 1997 financial crisis," he said through a translator.

In an interview in his office on Friday, Mr Lee also spoke about a huge US immigration raid that detained hundreds of Koreans, as well as Seoul's relations with rival North Korea, neighbouring giant China and Russia.

But trade and defence talks with the US, South Korea's military ally and a top economic partner, are overshadowing a trip Mr Lee began yesterday to New York, where he will address the United Nations General Assembly and be the first South Korean president to chair a meeting of the Security Council.