The United States government is expected to launch an investigation into the unfair practices of the Chinese shipbuilding industry following a petition from the United Steelworkers Union (USW). Analysts anticipate that this could potentially benefit the Korean shipbuilding industry.
According to a report by the Korea Trade-Investment Promotion Agency (KOTRA) on the 7th, Sanction to Chinese Shipbuilding in the U.S. and the Impact of Section 301, the United Steelworkers Union formally requested the U.S. Trade Representative (USTR) to investigate China’s purportedly unjust and discriminatory practices in the maritime, shipbuilding, and logistics domains on the 12th of last month.
The union has claimed that over the past two decades, the People’s Republic of China (PRC) enacted a comprehensive strategy to dominate global transportation and logistics networks, including employing various non-market policies. It alleges that China has heavily invested in commercial shipbuilding while forcing U.S. steel manufacturers to provide raw materials at low prices.
In response, the union petitioned to investigate China’s unfair trade practices under Section 301 of the U.S. Trade Act. The U.S. Trade Representative must review the petition and decide whether to initiate an investigation within 45 days.
The investigation petitioned by the union is based on Section 301 of the U.S. Trade Act, which permits broad trade retaliatory measures under the president’s jurisdiction if it is determined that a trading partner’s unfair or discriminatory trade practices or specific imported goods disrupt trade within the United States.
As the United Steelworkers Union leads the movement to sanction Chinese shipbuilding, various analyses are emerging regarding the potential impact on the Korean shipbuilding industry. South Korea, the second-largest producer of commercial vessels globally after China, is expected to benefit from the U.S.’s efforts to counter China.
In February, U.S. Navy Secretary Carlos Del Toro visited Korean shipbuilding companies in Busan, Ulsan, and Geoje to explore cooperation in shipbuilding and defense industries necessary for building a robust naval force. One rationale behind his visit was to consider diverting some demand to allied nations as the demand for ship maintenance and repairs in the U.S. has reached saturation.
However, some analysts caution that the immediate advantages for the Korean shipbuilding industry might be constrained, considering factors such as the Jones Act, which restricts U.S. ship procurement demand, and the fact that over half of the world’s ships are built in China.
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