South Korea's president has raised concerns about the current US visa system, suggesting it could discourage Korean companies from maintaining or increasing direct investments in the United States. This statement came during a news conference marking the president's 100 days in office, following a recent immigration incident involving Korean workers in the US.

Immigration Raid Sparks Controversy

The presidential comments were prompted by a September 4 immigration raid in Georgia, which resulted in the arrest of over 300 South Korean workers. These workers were employed at a battery factory under construction at Hyundai's auto plant. Following negotiations with US authorities, the detained Korean workers are set to return home on a charter plane.

Visa System Under Scrutiny

The South Korean president emphasized that discussions are underway between South Korean and US officials to explore potential improvements to the visa system. The current system, according to the president, is making companies hesitant about direct US investments.

US authorities reported that some of the detained workers had illegally crossed the border, while others had either expired visas or had entered on visa waivers that did not permit work. It was revealed that South Korean companies have been using short-term visitor visas or the Electronic System for Travel Authorization (ESTA) to send workers for manufacturing site launches and setup tasks, a practice that had been previously tolerated.

Impact on Future Investments

The South Korean president stressed the importance of establishing a visa system for skilled Korean workers, stating that it would significantly influence future South Korean investments in the US. The president noted:

"Technicians are needed for facility construction and equipment installation when the US lacks that workforce."

Calls for Visa System Improvement

The incident has highlighted the need for a more accommodating visa system for skilled Korean workers. The South Korean government is advocating for changes that would allow their companies to send necessary personnel for short-term assignments without legal complications.

As both nations work towards resolving this issue, the outcome of these discussions could have far-reaching implications for US-South Korea economic relations and future Korean investments in the United States.

South Korea's export-driven economy received a boost in July as overseas shipments surpassed expectations, growing by 5.9% year-over-year. This increase outpaced the consensus estimate of 5.1%, primarily fueled by robust sales in the semiconductor and automotive sectors.

Key Highlights

• Exports rose 5.9% year-over-year in July, exceeding the 5.1% forecast
• Semiconductor exports saw strong demand, particularly for high-performance AI chips
• Automobile shipments increased by 8.8%, driven by solid demand from non-US markets
• A trade surplus of $6.60 billion was recorded, with imports rising by 0.7%

US-South Korea Trade Agreement

A significant factor influencing the export surge was the recent trade agreement between South Korea and the United States. Key points of the deal include:

• A 15% across-the-board tariff rate, replacing the threatened 25% duty
• Reduction of existing 25% duty on automakers to 15%
• $350.00 billion in Korean investment commitments to the US
• Pledges to purchase more American energy

This agreement led many companies to front-load shipments before the new US tariffs took effect on August 1, contributing to the July export growth.

Sector-Specific Performance

The semiconductor industry played a crucial role in driving exports, with increased demand for high-performance AI chips. The automotive sector also showed strength, with exports rising 8.8%, primarily due to solid demand from markets outside the US.

Regional Export Trends

• Exports to China declined by 3.0%, affected by weaker shipments of petrochemicals and wireless devices
• Exports to the US grew by 1.4%

Government Support

Recognizing the importance of exports to the national economy, which generates over 40% of GDP, the South Korean government has taken proactive measures:

• Passed a supplementary budget of 31.80 trillion won to support the trade-dependent economy

Looking Ahead

While the July figures are encouraging, the global trade landscape remains complex. The new trade agreement with the US and the government's supportive measures aim to maintain South Korea's competitive edge in key export sectors like semiconductors and automobiles. However, the decline in exports to China, South Korea's largest trading partner, highlights ongoing challenges in the region's economic dynamics.

As global demand for high-tech products continues to evolve, particularly in AI and automotive technologies, South Korea's export-oriented industries are poised to play a significant role in shaping the country's economic trajectory in the coming months.