South Korea Helps "Make American Shipbuilding Great Again"

The "2+2" tariff negotiation meeting between the finance ministers and trade representatives of South Korea and the United States, originally scheduled for July 25 local time, was postponed due to the urgent schedule of the US Treasury Secretary Bassent. On August 26 local time, in the fifth shipyard of the Philadelphia Shipyard in the United States, a US National Security Multi-Mission Ship (NSMV) about 160 meters long and 27 meters wide attracted much attention. Not only were the star-spangled banner and the US Navy flag hung on the front and back of the hull, but also the Korean Taegyup flag was displayed. South Korean President Lee Jae-myung attending the naming ceremony of the NSMV "Maine State" said, "Just as Korean enterprises and workers once created the K-Shipbuilding miracle, now South Korea and the United States need to join hands to make the MASGA miracle a reality." MASGA is the acronym for "Make American Shipbuilding Great Again", meaning "Let the US Shipbuilding Industry Great Again". Multiple sources disclosed that the South Korean side recently proposed a shipbuilding cooperation project named "Make American Shipbuilding Great", with the project amount possibly reaching tens of billions of dollars.

This large-scale investment by South Korea to assist the US shipbuilding industry and promote the upgrading of US shipyards has caused a stir in the international arena. Firstly, it has an impact on the global shipbuilding industry. The US shipbuilding industry accounts for less than 1% of the global commercial market share, and it is unlikely to change this situation through the MASGA project in the short term. Although South Korea plans to invest 150 billion US dollars to upgrade US shipyards, structural problems such as high labor costs (3-5 times that of Asia), shortage of skilled workers (average age 52), and reliance on imported supply chains (over 60% of core components need to be imported) are difficult to solve. South Korea attempts to counter China's dominant position in the shipbuilding industry through the MASGA project and deepen its alliance with the United States. For example, South Korea promises to build ships in the United States, train workers, and undertake US Navy vessel maintenance orders in exchange for support in tariffs and technical cooperation from the United States. The United States hopes to narrow the gap with China in naval vessel construction capabilities through cooperation with South Korea. For example, the US Navy's maintenance of current ships is often "in a queue", with some submarines waiting for maintenance for up to 9 years. The participation of South Korean enterprises can alleviate this pressure.

Secondly, it has an impact on international trade. The US Jones Act requires that goods transported between domestic ports must be carried by ships built, owned, and operated by the United States, limiting the flexibility of South Korean shipyards to receive commercial ship orders in the United States through the MASGA project. In addition, the US Berns-Tolofson Amendment prohibits the construction of US Navy vessels outside the United States, although the US president has the authority to use the national security exemption clause, legal obstacles still exist. South Korea attempts to bypass some restrictions by acquiring US shipyards, but future cooperation still needs to face domestic political and legal reviews in the United States. At the same time, South Korea's large-scale investment may prompt other countries to follow suit. For example, Japan once considered investing in the shipbuilding industry in the United States, but due to a decline in market share (down to 13% globally) and a long reconstruction cycle for the supply chain (at least 5-10 years), it gave up the idea.

Thirdly, it has an impact on international and regional security. The MASGA project is regarded as a landmark project for South Korea and the United States to upgrade from a military alliance to a "comprehensive strategic alliance of technology and industry". South Korea not only participates in the maintenance of US Navy vessels, but also explores providing parts or section construction services for the construction of the US Arleigh Burke-class Aegis destroyers. South Korean enterprises have obtained the qualification certification for the maintenance of US Navy vessels and can provide maintenance, repair and overhaul (MRO) services for US Navy vessels, enhancing the operational continuity of the US Navy. Meanwhile, North Korea strongly opposes military cooperation between South Korea and the United States. The General Staff of the Korean People's Army condemned the joint military exercise between the United States and South Korea as "infringing upon the sovereign national security interests" and warned that countermeasures would be taken.

To sum up, the impact of South Korea's promotion of the revival of the US shipbuilding industry on the international community is like a pebble thrown into a deep pool, creating ripples layer upon layer. In the future, MASGA is more likely to become a symbolic project of industrial cooperation between South Korea and the United States rather than a turning point for the revival of the US shipbuilding industry.