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Republic of Korea, United States conclude six-year defense cost-sharing deal

Rate of defense cost-sharing frozen in 2020, increased by 13.9% in 2021
Increased rate of defense spending by ROK applied from 2022 through 2025
Six-year deal will take effect through parliamentary ratification after its official signing

Republic of Korea, United States conclude six-year

The Republic of Korea (ROK) and the United States (US) have concluded a six-year (2020-2025) deal for the 11th Special Measures Agreement (SMA). The two countries agreed to freeze the rate for 2020, to increase it by 13.9% for 2021, and to reflect the increased rate in the ROK’s defense spending in the previous year in the other years.

In the announcement on March 10, a spokesperson for the Ministry of Foreign Affairs commented, “The two countries finally reached an agreement related to the negotiations for the SMA in the 9th meeting, which was held in Washington from March 5 to March 7 (local time).”

The deal is the outcome of seven negotiations with the Trump administration and two negotiations with the Biden administration. The two countries reached an agreement 1.6 years after the official launch of the bilateral negotiations in September 2019, and closes a 1.3-year period with no SMA in effect, as the 10th SMA lapsed on December 31, 2019.

The 11th SMA will be valid for six years. The ROK’s payment for 2020 is 1 trillion and 38.9 billion won, which is frozen at the 2019 level.

The ROK’s 2021 defense spending reaches 1 trillion and 183.3 billion won, an increase of 13.9% compared to 2020. The jump reflects last year's 7.4 percent increase in the ROK's defense spending, as well as a 6.5 percent rise in the cost for Korean workers in the US Forces in Korea (USFK), following the increased lowest personnel cost allocation rate in the defense cost-sharing. 13.9% is an exceptional rise considering the increase of personnel cost in line with system improvement.

The two countries also agreed to link the ROK’s SMA payments from 2022 through 2025 to the increase in the ROK’s defense spending in the previous year. The rate of the defense spending increase reflects the ROK’s financial capacity and defense capabilities, and is determined through parliamentary deliberations.

The two countries also codified an SMA rule for the first time to enable the personnel cost to be paid at a level set in the previous year, in order to prevent the Korean USFK workers from being furloughed again in the absence of SMA negotiations, which happened last year for the first time since the launch of the SMA.

Starting from 2021, the lowest personnel cost allocation rate in the defense cost-sharing will also be increased from 75% to 87%. The two countries agreed to amend the target of 85% from an aspirational target to a mandatory target, and to endeavor to make the US allocate at least 2%.

Accordingly, the two countries decided to strengthen the transparency of the execution of defense cost-sharing, as well as the stabilization of the employment and living situations of Korean USFK workers, in order to eliminate the possibility of another furlough.

“The agreement served as an opportunity for the two countries to reaffirm the importance of the solid ROK-US alliance as the linchpin for peace and prosperity on the Korean Peninsula and in Northeast Asia, and the need for the stable stationing of the USFK. It will also contribute to developing the ROK-US alliance and strengthening the combined defense posture,” an official from the ministry said.

The SMA will take effect after going through the steps of tentative signing, formal signing, and parliamentary ratification. After completing the procedures in the ROK, the two countries will strive to make the SMA take effect as soon as possible.

By Joo-Hyeong, Lee < >

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