Seoul: South Korea's offer to help revitalize the United States' shipbuilding industry was a key to reaching a tariff deal with the Donald Trump administration, Seoul's trade minister said Thursday, also highlighting a "key role" U.S. Secretary of Commerce Howard Lutnick played in securing the last-minute deal.
According to Yonhap News Agency, Trade Minister Yeo Han-koo emphasized the significance of the proposed investment fund for shipbuilding cooperation as a pivotal factor in the negotiations. The announcement of the Korea-U.S. tariff deal came after a virtual press briefing held in Washington. Yeo has been instrumental in leading South Korea's lengthy tariff negotiations with the United States.
"As you know, President Trump has a huge interest in the shipbuilding sector... so the Ministry of Trade, Industry and Energy devised a proposal on shipbuilding cooperation in close coordination with the presidential office," added the South Korean official.
The Seoul-proposed initiative, dubbed "Make American Shipbuilding Great Again (MASGA)," involves a US$150 billion investment by South Korea in the U.S. shipbuilding industry. This investment is part of a larger $350 billion package that Seoul pledged in exchange for the U.S. reducing its reciprocal tariff rate on South Korea from 25 percent to 15 percent.
"We thought about what only South Korea can do and Japan and the European Union, who struck trade deals with the U.S. earlier, cannot do... and the answer was shipbuilding," Yeo told the press briefing.
Seoul's significant investment pledge includes a $200 billion fund for advanced industries such as semiconductor, battery, and biopharmaceuticals, as stated by the Korean government.
To support the government's efforts to strike a trade deal, Hanwha Group Vice Chairman Kim Dong-kwan visited Washington this week, along with other Korean business leaders, including Samsung Electronics Co. Chairman Lee Jae-yong and Hyundai Motor Group Executive Chair Euisun Chung. Hanwha Group, which owns Hanwha Ocean Co., a major shipbuilder, acquired Philly Shipyard in Philadelphia last year and is expected to play a crucial role in the U.S. shipbuilding revitalization initiative.
Yeo noted that loans and guarantees make up a significant portion of the $350 billion investment pledge, with the Korea Trade Insurance Corp. and the Export-Import Bank of Korea playing vital roles, although further discussions are needed for the details.
The trade minister credited his negotiations with Lutnick as crucial in creating momentum for the last-minute tariff negotiations with the U.S., describing the U.S. commerce secretary as a "deal maker."
"I remember the moment when Lutnick reached out to us shortly after the U.S. reached a trade agreement with Japan, calling for a meeting," said Yeo. "Our trade negotiations quickly gained speed from that point on."
"Lutnick also provided us with valuable insights on how to approach Trump during direct negotiations," he added, noting that they held approximately 10 rounds of meetings in Washington, at the commerce secretary's residence in New York, and in Scotland, where Lutnick was accompanying Trump on a trip for trade negotiations with the European Union and China.
Meanwhile, Yeo called for continued efforts to bolster the "fundamental" competitiveness of Korean industries, indicating that despite Thursday's tariff deal, Seoul might face further pressure from the U.S. administration to eliminate non-tariff trade barriers in the era of trade protectionism.