Photo by STAN HONDA/AFP via Getty Images
Korean companies have invested 114 billion dollars in the United States in the last three years, creating tens of thousands of American jobs and helping to rebuild our manufacturing base in the United States. Korea, Korean companies, and the Korean people have put “all their chips” on the United States and the benefits for our country are many. To encourage Korea to continue to place its bet on us and to chart its future with us, and not with Europe, Southeast Asia, or even China, in a way that is most beneficial to the American people, and the U.S. economy, the next U.S. president and Congress, could make long-discussed changes that would boost the relationship with Korea to new heights, make our country safer, the alliance more robust, and create more new jobs in the United States.
First, the United States could repeal its 232 steel tariffs and quota on South Korea. The Peterson Institute for International Economics estimated that each job saved in the steel industry due to the tariffs came at a cost of nearly $650,000 to consumers. Repealing the tariffs would likely reverse many of these economic distortions and lead to overall economic gains for the United States. Partnerships, not tariffs, offer a way to revitalize our steel industry. The stalled Nippon Steel acquisition of U.S. Steel means that not only are U.S. customers paying more for steel, if something is not done to facilitate this type of partnership, it seems likely that the U.S. steel industry will not survive Chinese competition. If the Nippon-U.S. Steel acquisition remains politically impossible, or even if it succeeds, the U.S. steel industry could and should explore forming a joint venture with South Korean companies or re-imagine a partnership with Nippon Steel in order to preserve not only jobs but the industry. Such a partnership could serve both Korean and U.S. industry and reestablish a viable steel industry for the future, powered by partnerships and American jobs, in the United States.
Second, another industry that a revitalized relationship with Korea could resuscitate is shipbuilding. South Korean companies have dipped their toes into the U.S. market with the $100 million purchase of U.S. shipbuilder Philly Shipyard. However, in order to save the shipbuilding industry and preserve U.S. capability to supply ships for the future — to our military as well as for cargo — we should take a far more sweeping approach and modify the Jones Act to allow production of needed vessels outside the United States such as LNG vessels that have not been built here since the 1970s. To encourage more shipbuilding in the United States, a joint ownership structure for a new, modern, and automated shipyard(s) in the United States could allow innovative South Korean companies to make significant investment in the United States that could not only preserve U.S. shipbuilding capacity and introduce thousands of new jobs into the United States, but could also help us retake a global leadership role in building the most advanced ships for our military and our industry.
Lastly, to facilitate even more Korean investment in batteries, semiconductors, and other industries of and for the future, and to ensure support for U.S. jobs and key industries as well as a viable future for industries like steel and shipbuilding, Congress should fast-track and promulgate the Partner with Korea Act introduced on October 8 to create a temporary, non-immigrant E-4 visa category for Koreans. Previously, when the United States concluded a free trade agreement (FTA) with a country, the deal came with special visa categories to help facilitate the increase in trade and investment that logically accompanies an FTA. Congress decided with the Korea-U.S. (KORUS) FTA in 2010 that such visa provisions did not belong in an FTA. That does not change the fact that such visa provisions are helpful to the United States and support the increased FDI that comes with an FTA. Therefore, Congress could rectify this and add in the jobs provisions to allow Koreans to more easily manage their significant investments in our industrial base, to support efforts to invest even more, and to create even more jobs in the United States. The KORUS FTA is, outside of NAFTA/MSCA, the largest trade deal for the United States, and the lack of more specialized visas means there are billions of Korean investment that are taking longer to materialize or, worse for the American people, are being redirected to Southeast Asia or elsewhere. If the E-4 visa bill goes through, it would catalyze even more Korean investment with more Korean companies launching new investments in the United States. Currently, the bulk of Korean investment comes from South Korean conglomerates (chaebols), but expanding the visa program could lead to smaller, new high-tech Korean companies to expand their investment approach in the United States.
The U.S.-Korea relationship is strong and built for the future, but a few political tweaks could launch the next decades of cooperation and investment, boosting prosperity in both countries.
This piece was originally published by the Center for Strategic and International Studies (CSIS) on Nov. 7, 2024. The Baker Institute has obtained copyright permission to republish the brief from CSIS. The original can be accessed here.
