US Calls China's Sanctions on Hanwha Ocean Irresponsible Interference

The U.S. State Department is speaking out after the Chinese government announced sanctions earlier this week on the U.S. operations of Hanwha Ocean, including the Philly Shipyard. The actions came as part of the reciprocal port fees announced by China in response to the USTR’s port fees, which target China-built ships in an effort to rein in China’s dominance of the shipbuilding industry.

China sanctioned five U.S. operating units of South Korea’s Hanwha Ocean, citing the company’s efforts in supporting the U.S. port fee program. In addition to the Philly Shipyard, China targeted Hanwha Shipping, which has committed to building and operating U.S.-flagged tankers and gas carriers.

Responding to media questions, a spokesperson for the U.S State Department called the sanctions “irresponsible” and said China was “interfering” with a private company’s operations. According to reports from Reuters and South Korea’s Yonhap News Agency, the U.S. said it was another example of China’s attempts to coerce South Korea.

Hanwha Ocean has been moving strongly to develop shipbuilding operations in the United States, including the $100 million purchase of the Philly Shipyard and commitments for large investments in U.S. shipbuilding. The company has also begun repairs of U.S. Navy auxiliary vessels at its shipyard in Korea.

The company looks to play a key role in South Korea’s promised “Make American Shipbuilding Great Again” (MASGA) initiative, which emerged as a cornerstone of U.S.-Korea trade negotiations. While many have questioned the execution of the program, South Korea promised to invest $150 billion in the U.S. shipbuilding during trade negotiations with the U.S.

The Chinese sanctions bar companies from trading with the Hanwha companies. While many have said it would not have an immediate effect, one South Korean lawmaker said it could cost the Philly Shipyard $60 million over the next two years. Another South Korean official told Reuters that it would be difficult to make all the needed materials and suppliers for the Philly Shipyard in the U.S.

The State Department called the sanctions an effort to interfere with Donald Trump’s efforts to rebuild the U.S. shipbuilding industry. They said the U.S. stands firmly with South Korea despite the Chinese efforts to undermine the cooperation in shipbuilding.

The statements came as South Korean officials were in Washington, D.C., to discuss the MASGA initiative. After the meeting, the South Koreans said they had “constructive discussions.” They said the sanctions imposed on Hanwha Ocean had not been discussed.