Government courts business for tariff talks but tightens grip at home

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Government courts business for tariff talks but tightens grip at home

Published: 30 Jul. 2025, 00:00

Audio report: written by reporters, read by AI

Lawmakers of the Democratic Party of Korea serving on the National Assembly’s Legislation and Judiciary Committee talk to reporters on July 28 after the party-led passage of a Commercial Act revision in the committee’s subpanel. The bill mandates cumulative voting and expands the separate election of audit committee members. From left: Democratic Party lawmakers Park Kyun-taek, Kim Yong-min, Jang Kyung-tae and Lee Sung-yoon. [YONHAP]

As the Korea-U.S. tariff negotiations enter their final stage, the Korean government has floated the "Make American Shipbuilding Great Again" or "MASGA" project as a bargaining chip. The proposal involves a multibillion-dollar shipbuilding cooperation plan aimed at breaking the deadlock over U.S. investment requirements and agricultural market access. Korea’s world-class shipbuilding capacity has made the offer viable, and Washington views Korean shipyards as a natural partner for rebuilding its own industry while curbing China’s maritime influence.

Business leaders are moving in tandem with the government’s strategy. Hanwha Group Vice Chairman Kim Dong-kwan, whose company acquired the Philadelphia Shipyard last year and has actively pursued joint projects with the United States, reportedly traveled to Washington to support the ongoing talks. The administration has repeatedly emphasized that securing favorable terms requires a “one-team” effort with the private sector. President Lee Jae Myung underscored last month that business cooperation is essential to unlocking a breakthrough.

Yet the government and the Democratic Party are simultaneously advancing legislation that business leaders see as restrictive. On July 28, the ruling party pushed the second round of commercial law amendments — dubbed “Stronger Again” — through the Legislation and Judiciary Committee and passed the so-called Yellow Envelope Act in the Environment and Labor Committee. Both bills are slated for a floor vote on Aug. 4.

Executives warn that the measures could undermine corporate stability. The commercial law revision would introduce a mandatory cumulative voting system, giving minority shareholders greater leverage in board appointments. Industry groups fear that outside investors with small stakes could band together to block business reorganizations or push for asset sales, exposing companies to disruptive campaigns without adequate tools to defend management decisions.

Minister of Employment and Labor Kim Young-hoon delivers remarks on July 28 after the National Assembly’s Environment and Labor Committee passed the so-called “Yellow Envelope Bill,” an amendment to Articles 2 and 3 of the Labor Union Act, which former President Yoon Suk Yeol had vetoed. The bill was approved at the committee’s plenary session after clearing its subpanel earlier in the day, with People Power Party lawmakers walking out. [YONHAP]

Concerns are even sharper over the Yellow Envelope Act, which expands the legal definition of employers to allow subcontracted workers to bargain directly with primary contractors. The shipbuilding sector, heavily reliant on subcontracting, could be hit immediately. The law also broadens the grounds for labor disputes, making strikes possible over restructuring or overseas plant relocations. The European Chamber of Commerce in Korea has warned that the measure could drive companies to scale back operations or exit the market.

Businesses remain the backbone of Korea’s economic growth and the source of leverage in tariff talks. The government’s appeals for unity with industry abroad ring hollow if domestic policies leave companies cornered at home.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.