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U.S. Abolishes Cost Waiver for Seoul's Arms Purchases
(MENAFN) The United States has eliminated a key cost exemption for South Korean arms purchases, significantly increasing Seoul's financial burden for American military equipment, a South Korean news agency reported Sunday, citing several unnamed sources with knowledge of the decision.
Washington informed the South Korean government approximately in August that it would terminate the non-recurring costs (NC) waiver previously extended to major allies, including South Korea, for weapons acquired through the Foreign Military Sales (FMS) program—a government-to-government procurement system.
Non-recurring costs encompass expenses U.S. defense contractors incur during weapon development and production, including research, engineering design, and testing expenditures.
The NC waiver previously enabled South Korea to reduce its U.S. weapons expenditures by roughly 5 percent, but the recent policy reversal will substantially raise Seoul's costs for importing American military hardware, sources told the agency.
Similar notifications were dispatched to other nations, including Japan, Australia, and NATO member states, according to the sources.
The news agency indicated the U.S. policy shift mirrors U.S. President Donald Trump's transactional alliance strategy and his longstanding view that allied nations have benefited from disproportionate trade surpluses with the United States.
South Korean President Lee Jae-myung convened a press briefing at the presidential office Friday to unveil the "joint fact sheet," which formalized South Korea's tariff and security arrangement with the United States.
The fact sheet stipulates South Korea will allocate 25 billion U.S. dollars toward U.S. military equipment acquisitions by 2030.
Washington informed the South Korean government approximately in August that it would terminate the non-recurring costs (NC) waiver previously extended to major allies, including South Korea, for weapons acquired through the Foreign Military Sales (FMS) program—a government-to-government procurement system.
Non-recurring costs encompass expenses U.S. defense contractors incur during weapon development and production, including research, engineering design, and testing expenditures.
The NC waiver previously enabled South Korea to reduce its U.S. weapons expenditures by roughly 5 percent, but the recent policy reversal will substantially raise Seoul's costs for importing American military hardware, sources told the agency.
Similar notifications were dispatched to other nations, including Japan, Australia, and NATO member states, according to the sources.
The news agency indicated the U.S. policy shift mirrors U.S. President Donald Trump's transactional alliance strategy and his longstanding view that allied nations have benefited from disproportionate trade surpluses with the United States.
South Korean President Lee Jae-myung convened a press briefing at the presidential office Friday to unveil the "joint fact sheet," which formalized South Korea's tariff and security arrangement with the United States.
The fact sheet stipulates South Korea will allocate 25 billion U.S. dollars toward U.S. military equipment acquisitions by 2030.
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