Trump’s immigration policies chill Japanese shipyard investment

A Trump administration push to convince Japan to invest in U.S. shipyards is running into an unexpected hurdle — its own immigration policy. The Commerce Department has been leaning on Japanese diplomats and business executives to commit a slice of the $550 billion Tokyo has promised to invest in the U.S. to modernize America’s moribund shipbuilding industry, according to four people familiar with the discussions, who were granted anonymity to discuss private conversations. In response to U.S. encouragement, Japanese business executives came to the U.S. last month to visit several port sites on the East Coast to assess their investment potential, according to two people familiar with their itinerary. Both were granted anonymity because they weren’t authorized to discuss a sensitive diplomatic issue. “It was an exploratory trip to demonstrate that Japanese companies have an appetite to invest in the sector,” one of the people briefed on the trip said. Despite the U.S. pressure, Japanese funding for shipbuilding is likely “years away” due to a shortage of domestic workers with the skills necessary for shipbuilding, said that person said. Specifically, Japanese officials are concerned about the administration’s hostility to foreign labor — evident by its slashing of work permits and visas for foreign laborers. The Trump administration’s “stance toward immigration is at odds with the needs of a skilled labor force,” the person added. Japan’s wariness underscores how the administration’s aggressive anti-immigration policy, punctuated with violent enforcement actions in cities including Minnesota and Chicago and rollbacks in visas for skilled workers, is running head-on into his push for foreign investment, a major component of Trump’s tariff-lowering trade agreements with Japan as well as South Korea and the European Union. And it could undermine Trump’s vow to rejuvenate ailing domestic industrial sectors, including U.S. shipbuilding. In particular, an Immigration and Customs’ Enforcement raid on a Hyundai battery plant in Georgia in September — resulting in the detention and deportation of some 300 South Korean workers employed at the site — has unsettled Japanese companies considering possible U.S. investments that require imported skilled labor, the person said. “Japanese companies are paying very close attention and there is real concern,” said Joshua Walker, president of the New York-based nonprofit Japan Society who has close contacts with Japanese private sector representatives. “The broader ICE enforcement climate has definitely spooked firms that rely on sending highly skilled workers for major investments under the new U.S.–Japan trade framework and to the Japanese embassy and consulates, as well.” The Japanese embassy in Washington didn’t respond to a request for comment. A Commerce Department spokesperson did not respond to multiple emails seeking comment. The Trump administration has pressed Japan as well as South Korea to make massive investments in U.S. shipbuilding, a key plank of the president’s campaign to boost industries that have withered in the face of stiff foreign competition and lack of investment. The shipyards in the United States currently build fewer than a dozen ships a year — heavily customized jobs for the U.S. Navy and Coast Guard — while those in Asia can mass produce thousands of vessels annually, noted Gordon Shearer, an analyst at shipping industry consulting firm Poten & Partners. Trump issued an executive order last year dedicated to rebuilding the country’s maritime industries with measures including a “shipbuilding financial incentives program” and “regulatory relief” for U.S. and foreign investors willing to provide funding for the sector. The U.S. Trade Representative pitched in with a sharp increase in port fees for Chinese ships and cargo in October to offset Beijing’s current global dominance of the shipping sector. (USTR quickly reversed that plan after Beijing threatened to impose punitive fees on U.S. ships and cargo in response.) South Korea committed to invest $150 billion in American shipbuilding as part of a preliminary trade deal reached last October, much of which is expected to come from private companies. Japan’s investment pledges — promised as part of a deal Tokyo and Washington announced last summer lowering U.S. tariffs to 15 percent — have so far focused primarily on the energy sector. The U.S. shipbuilding sector is also wrestling with a looming labor crisis. Around 25 percent of the sector’s workers will reach retirement age by 2031, at a time when naval shipbuilding requirements alone will require an additional 250,000 skilled workers, John Phelan, a former Secretary of the Navy, said in January. And in the case of foreign shipbuilding projects, workers will need training to master the foreign technology and ship designs. Current immigration policies — including a sharp reduction in the number of H1-B visas designed for temporary highly skilled workers imposed in September and visa bans or restrictions for citizens of dozens of countries on national security grounds — limit countries’ ability to bring in their own citizens to manage and train U.S. workers. “Immigration restrictions hurt the ability to upskill laborers here in the United States,” said Arnav Rao, a transportation policy analyst at the centrist nonprofit think tank The Open Markets Institute. “If the administration continues to take this hardline approach where we won’t even allow workers to come in and train our people, then we don’t really have much hope of reviving our shipbuilding.” Watch: The Conversation Play Video38:03 Leon Panetta on Iran, Ukraine and the new global power struggle The White House has sent mixed messages over how open it is to bringing in foreign workers as it works to woo investment from abroad. After the Hyundai raid last fall, Trump posted on social media that he wanted international companies “to bring their people of expertise for a period of time to teach and train our people.” He also singled out shipbuilding, in particular, as one of the industrial products “we have to learn from others how to make, or, in many cases, relearn, because we used to be great at it, but not anymore.” After the Hyundai raid, the administration moved to placate Seoul’s concerns by forming a working group with South Korean officials on providing U.S. visas for Korean workers. However, seven months of negotiations have failed to produce a mutually acceptable visa category for South Koreans to work on projects created by the $350 billion that Seoul has committed in U.S. investments, said a person familiar with the post-Hyundai raid discussions and granted anonymity because they weren’t authorized to discuss sensitive diplomatic matters. The ICE raid in Georgia “highlighted the tension between ‘America First’ immigration impulses and the reality that U.S. industrial revitalization hinges on foreign investment, talent, and expertise,” said Arius Derr, a spokesperson at the nonprofit Korean Economic Institute of America. “In order to support the billions of dollars of investment that Korea is bringing over here, there needs to be some sort of runway for these Korean workers to come over, get everything set up, and then most importantly, teach Americans how to use it.” The administration’s response to the visa issue, going forward, may determine whether it can regain the trust of governments in South Korea, Japan and Taiwan, which send large numbers of their nationals to staff the start-up stages of investment projects. “Did the Georgia raid send a chill? My answer is ‘Is the Pope American?’ Of course it did,” said Rep. Greg Stanton (D-Arizona), whose district includes areas where Taiwan Semiconductor Manufacturing Co. has invested billions to build new chip production fabs. “Obviously, if you need to blend an American workforce and a foreign workforce together, that did not send the right messages about foreign direct investment in the United States.” For more information, visit us at https://www.beverlyhillsimmigrationlaw.com/.