Securing a defense industrial partnership

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Securing a defense industrial partnership

Published: 07 Jul. 2024, 20:09 Updated: 07 Jul. 2024, 20:12

Hwa Yu & Brian Hobbs
Hwa Yu is CEO of Delta One LLC, a U.S. consulting firm on industrial cooperation and Cybersecurity Maturity Model Certification (CMMC). Brian Hobbs is a PhD candidate at Virginia Tech. He retired from the U.S. Air Force as a lieutenant colonel, had two assignments in Korea, and has expertise in security cooperation through Foreign Military Sales (FMS).

A new Cold War era has arrived. China’s territorial ambition and Russia’s expansion in both Georgia and Ukraine have compelled the U.S. to rethink its national defense strategy to defend the homeland, allies and partners. The Department of Defense (DoD), acknowledging “the critical importance of maintaining a robust, resilient, and dynamic defense industrial ecosystem” to counter threats posed by China and Russia in its National Defense Industrial Strategy (NDIS), has been actively seeking sustained international cooperation.

One framework designed to strengthen industrial collaboration among security partners is the Reciprocal Defense Procurement Agreement (RDP-A), with each signatory known as a ‘qualifying country.’ Its stated purpose is to enhance rationalization, standardization, interoperability, and interchangeability among military forces. The U.S. has RDP-As with 28 qualifying countries and is currently negotiating with at least three more: Brazil, India, and South Korea.

It is rather unusual that an RDP-A has not yet been signed between the U.S. and Korea, given the trends and history of RDP-As that have extended to non-NATO allies and partners, such as Egypt and Japan. For the U.S., Korea has grown to possess technological advancement and manufacturing capabilities that the U.S. can leverage with more ease to deliver to warfighters. For Korea, the U.S. is the only security alliance that has evolved into the global comprehensive strategic alliance for the past 70 years and the DoD market is attractive.

Discussions about an RDP-A between the U.S. and South Korea have been on and off since the late 1980s. Unsurprisingly, in Korea, the main reasons for not signing the RDP-A remain unchanged for almost four decades, even though its defense industry has become globally competitive and mature — exceeding 15 billion dollars in average annual defense industry exports and aiming to be among top four defense exporters globally by 2027.

The greatest concern for Korean defense industries revolves around full and open mutual access to each other’s defense market. RDP-A opponents in Korea fear that the technologically advanced U.S. defense industry could dominate the market, weakening the local industrial base, if U.S. companies gain unrestricted access. Additionally, they argue that Korean companies would face stiff competition from 28 other RDP-A countries and that the DoD market open to foreign companies is actually not that big due to numerous restrictions designed to protect domestic companies, such as small businesses, despite the Buy American waivers.

However, understanding how the RDP-A benefits both countries mitigates these concerns. First, the RDP-A is on one hand a framework for communicating about industrial cooperation and market access. Second, the RDP-A is meant to remove discriminatory barriers to procurement, to the extent mutually beneficial and consistent with national laws, regulations, policies, and international obligations. Third, any country can terminate the RDP-A. If the Korean government should find the RDP relationship to be detrimental, it can withdraw. Fourth, although historical data does not provide any consistent patterns of exports or imports, trends suggest that RDP-As tend to strengthen industrial cooperation overall, benefiting both sides of the partnership. Finally, all RDP-As have expiration dates, but none of the 28 countries with RDP-As have walked away from their RDP relationships. All have renewed their agreements, some which have remained in effect for several decades. The longevity of the agreements strongly suggests that membership in the U.S.-centered RDP-A network does not produce negative results among partner country defense industries.

Another particular concern for Korea’s defense industry stakeholders is that an RDP-A might prohibit or replace offsets, consequently reducing or removing offset business opportunities for Korea’s defense industry. Most RDP-As state the following words or something very similar: the RDP-A does not regulate offsets, and the parties agree to discuss measures to limit any adverse effects that offset agreements have on the defense industrial base of each country. That is, RDP-A and offsets co-exist.

Although the RDP-A enhances mutual defense market access, the goal is more strategic than simply maximizing economic benefits. For example, Lithuania’s 2021 agreement is connected not only to Russia’s regional aggression, but also to China’ economic coercion in Europe. Even so, in many cases, having an RDP-A relaxes obstacles like Buy American requirements.

In summary, the global security landscape is aligning toward the second Cold War, creating conditions that make signing an RDP-A more critical for the U.S. and South Korea. The RDP-A gives South Korea’s defense industry increased access to the world’s largest defense market, offers U.S. defense industry increased access to South Korea’s vibrant defense market, and facilitates industrial cooperation and mutual opportunities for enrichment through partnership. The RDP-A helps both countries build a robust, resilient, and dynamic industrial ecosystem to support warfighters among friendly and allied countries in a more effective and efficient manner.

At the Center for Strategic and International Studies (CSIS) and Defense Acquisition Program Administration (DAPA) Conference on June 27, 2024, the Honorable Douglas R. Bush, Assistant Secretary of the Army for Acquisition, Logistics and Technology, highlighted the importance of close military and industrial cooperation between the U.S. and Korea to continue increasing interoperability and driving innovation. The Honorable Seok Jong-gun, Minister of the DAPA, echoed the need for expanded cooperation to integrate cutting-edge technologies, such as AI, robotics, and unmanned systems into our defense strategies to ensure a stable and secure future. Well, “Time is not on our side; we need to move fast,” as Minister Seok put it.