'Save Exports'... Shipbuilding "Resolve Labor Shortage" Steel "Public-Private Cooperation to Overcome Customs Difficulties"

On the 10th, at the Mu협 '2nd Urgent Export Countermeasure Meeting by Industry', Chosun requested "Prompt implementation of foreign workforce introduction and expedited issuance of E7 visas"
Steel industry stated "Expansion of exception exports for US quota items... Approval period reduced from 3 to 1 day"

Jung Manki, Vice Chairman of the Korea International Trade Association.
Photo by Korea International Trade Association

[Asia Economy Reporter Moon Chaeseok] To revive South Korea's exports suffering from trade deficits, the shipbuilding and steel industries requested the authorities to address labor shortages and export quota issues during the second session of the annual industry-specific relay meetings.

On the 11th, the Korea International Trade Association (KITA) announced that it held the '2nd Emergency Export Countermeasure Meeting' the previous day at the Trade Center in Samseong-dong, Gangnam-gu, Seoul, chaired by Vice Chairman Jeong Manki. The meeting was attended by the Korea Shipbuilding & Offshore Plant Association, Korea Iron & Steel Association, Korea Industrial Federation Forum, major industry companies, and the Ministry of Trade, Industry and Energy.

Vice Chairman Jeong reported that global investment banks (IBs) such as Goldman Sachs forecast China's economic growth rate this year to be over 5%. He argued that if the spread of COVID-19 decreases after China's largest holiday, the Lunar New Year, and stability is restored in March and April, South Korea's exports will increase in the second half of the year.

The problem lies in the competitive relationship with China in shipbuilding and steel. It is difficult to be optimistic about export expansion due to China's recovery. Vice Chairman Jeong emphasized that resolving the shipbuilding labor shortage and adjusting steel export quotas to the U.S. are urgent tasks.

He highlighted, "The shipbuilding industry is facing a severe labor shortage, with the number of workers halving over the past six years," and stressed the need for additional measures such as reemployment of retired personnel.

He added, "Steel exports to the U.S. must meet a quarterly quota of 30% of the total 2.63 million tons; if not met, the remaining quota cannot be carried over to the next quarter." He urged that some quota be allocated to small and medium steel companies to avoid leftover quotas and that efforts to negotiate carryover with the U.S. should be strengthened.

Furthermore, he anticipated that with the introduction of the European Union (EU) Carbon Border Adjustment Mechanism (CBAM), a 5.8% tariff would be imposed on South Korea's exports to the EU, projecting a decrease in exports by about 12.3%.

Vice Chairman Jeong stated, "It is known that the EU will not implement paid allocation of emission permits for steel companies for a considerable period," and suggested the need to consider converting paid allocations to free allocations or providing export rebates based on export companies' export volumes.

The shipbuilding industry emphasized that while exports are expected to recover this year, resolving the labor shortage is key. Kwon Bonggi, Vice Chairman of the Korea Shipbuilding & Offshore Plant Association, announced that exports this year are expected to increase by about 14.7% from last year to $20.98 billion (approximately 26.183 trillion KRW).

Vice Chairman Kwon urged, "It is necessary to promptly implement government support measures such as expanding the introduction of foreign labor and speeding up the issuance of the special shipbuilding activity visa 'E7' so that these policies can be felt on the ground."

Industry insiders in shipbuilding argued, "To improve systems related to the utilization of retired personnel, incentives such as tax benefits or employment subsidies should be strengthened," and "The regulation requiring foreign workers holding E7 visas to be paid at least 80% of the Gross National Income (GNI) per capita should be relaxed to below 70%."

They also requested expansion of bank loan limits and special limits (financial support), as well as the establishment of base hubs for shipbuilding and offshore equipment in Brazil, Japan, and other countries (export support).

The steel industry cited the growth of production capacity in emerging countries, the U.S. Inflation Reduction Act (IRA), and the EU CBAM as burdens. They forecast exports this year to decrease by about 5.4% from the previous year to $36.37 billion (approximately 45.39 trillion KRW).

Byun Youngman, Vice Chairman of the Korea Iron & Steel Association, reported that exports are limited due to export quota systems for the U.S. and EU. He said that while negotiating with foreign countries to increase quotas, optimizing the operation of allocated quotas is essential. He emphasized that about 75,000 tons, or approximately 3% of the total 2.63 million tons U.S. export quota as of last year, can be used exceptionally and that this should be expanded. Vice Chairman Byun mentioned, "The association plans to simplify procedures by reducing the export approval period from the existing three days to one day."

He also stressed the urgency of operating a public-private joint response system to overcome local customs clearance difficulties. He requested, "Please promptly provide the latest information collected by overseas branches of export support organizations such as KITA and KOTRA," and appealed, "The government should continue efforts in negotiations to respond to facility expansions and strengthened import regulations in Southeast Asia and India."

Steel industry insiders said, "Please expand trade insurance limits," and "We hope to obtain information necessary for diversifying exports to regions other than the U.S. and EU through customized consulting from KITA, KOTRA, and others."

A KITA official stated, "KITA plans to propose specific policy alternatives to government ministries such as the Ministry of Trade, Industry and Energy and the Financial Services Commission regarding the raised issues, including export finance difficulties."

KITA announced that the third meeting will be held the next day at the Trade Center, targeting the nuclear power, plant, and engineering industries.

This content was produced with the assistance of AI translation services.