South Korea holds 'shipbuilding card' in US tariff negotiations, minister says

By Ju-min Park

SEOUL (Reuters) - South Korea's trade and industry minister Ahn Duk-geun said on Wednesday that potential cooperation with Washington in the shipbuilding sector is a "very important card" in negotiating with the U.S. over its tariffs.

U.S. President Donald Trump spoke to South Korean interim leader Han Duck-soo late on Tuesday to discuss shipbuilding and potential energy deals in what Trump labelled a "great call", a day before a 25% tariff on its Asian ally was due to kick in.

"Since President Trump and the Trump administration are showing great interest in shipbuilding cooperation, we believe that the shipbuilding sector will be a very important negotiating card for us," Minister of Trade, Industry, and Energy Ahn told parliament, citing Trump's call with Han.

South Korea is a major global player in the shipbuilding industry, and Trump has previously cited concern over how his country has fallen behind in a sector that is also dominated by China.

Ahn warned, however, that U.S. tariffs were expected to have a "very negative" impact on South Korean exports such as automobiles, reiterating that the government would focus on negotiating with Washington.

The Yonhap News Agency cited a senior official at acting president Han's office as saying the top priority in negotiating with the U.S. was to lower tariff rates.

Trump said he talked to Han about South Korea's payment for "big time" U.S. military protection, signaling that defence cost could be part of a broader deal not only about tariffs and trade.

Trump has pressured allies including South Korea to pay more for American troops stationed in the countries.

The official from Han's office, however, said the issue of defence cost was not connected to the tariff negotiations, according to Yonhap.

"I think it is a wiser solution to elevate the South Korea-U.S. alliance to a stronger security alliance and an economic alliance," Han said in a Facebook post late on Wednesday, citing game theory in which individual players repeating selfish choices cause long-term losses for everyone.

"Long and difficult negotiations remain."

On Wednesday, the South Korean government announced emergency support measures for its auto sector, which include tax cuts and subsidies to boost domestic demand.

With South Korea seeking to negotiate with the U.S. over tariffs, not retaliate, Seoul's top trade envoy Cheong In-kyo is currently in Washington to meet top U.S. officials including Trade Representative Jamieson Greer.

Cheong said that he would put on the table a potential energy deal in Alaska and cooperation in shipbuilding in negotiating with Washington officials.

South Korea has shown interest in the Alaska LNG project, which is part of Trump's bid to boost U.S. gas exports, but any participation would hinge on discussions with Washington, Minister Ahn said, noting the project might struggle to achieve profitability.

Grilled by opposition lawmakers over whether the government was giving too much away, Ahn promised to protect the national interests.

"We might have lost a few battles, but did not lose in a war. We will not lose in this war too," he said.

(Reporting by Ju-min Park and Joyce Lee; Editing by Ed Davies and Hugh Lawson)