US tariff deal unfavorable to oceans ministry's bid to control shipbuilders

The slogan, "Make America Shipbuilding Great Again," is written on a cap decorated with the flags of Korea and the United States. Disclosing the cap used to convince the U.S. to sign a tariff deal with Korea, the presidential office said Sunday that the so-called "Make American Shipbuilding Great Again" project was a key contributor to the agreement signed Thursday. Yonhap

The proposed transfer of the shipbuilding and offshore plant industry division to the Ministry of Oceans and Fisheries appears to be losing momentum, as the Ministry of Trade, Industry and Energy convinced the United States to lower tariffs on Korea by proposing a revitalization of U.S. shipyards through Korean investments.

Before the two countries signed a tariff deal on Thursday, the oceans ministry had emphasized the need for the transfer, citing potential synergy effects after the ministry's planned relocation from Sejong to Busan later this year.

“If the division consisting of 10 officials is transferred to our ministry, we will perform 1,000 or even 10,000 times better,” Oceans Minister Chun Jae-soo told reporters on July 24, despite Industry Minister Kim Jung-kwan’s claim that the administration should remain cautious about the matter.

“The shipbuilding industry relates to materials, components, equipment, machinery and digital industries, not just shipping,” Kim said July 21.

According to sources from the government and ruling party, the latest tariff deal is expected to prompt President Lee Jae Myung to decide in favor of the industry ministry,in consideration of ongoing talks surrounding the so-called "Make American Shipbuilding Great Again" (MASGA) project, which has been touted as a key contributor to the agreement with the U.S.

Industry Minister Kim Jung-kwan speaks to the press at Incheon International Airport, Friday, after returning from Washington. Yonhap

The project, which aims to create a $150 billion fund for shipbuilding cooperation between the two countries, was proposed by officials from the shipbuilding and offshore plant industry division.

U.S. negotiators were also reportedly impressed by Kim’s fluent English and his use of a one-square-meter display board to explain the project to U.S. Commerce Secretary Howard Lutnick, who, according to the government, saw the proposal as “a great idea.”

“It would have been impossible to reach an agreement, unless we proposed the shipbuilding partnership,” Kim Yong-beom, presidential chief of staff for policy, said Sunday in an interview with broadcaster KBS.

Shipbuilding industry officials have also opposed bringing the sector under the oceans ministry.

“Unlike the industry ministry, which focuses on promoting shipbuilding, the oceans ministry has mainly been responsible for regulating maritime industries,” a shipbuilding industry official said.

Given ongoing coordination with other ministries for the MASGA project, there is speculation that the Presidential Commission on Policy Planning will not include the shipbuilding and offshore plant industry division’s transfer in its forthcoming announcement of government reorganization this month.

Still, civic groups in Busan are calling for the transfer, saying the oceans ministry should take the lead in both shipbuilding and shipping policies.