How South Korea Should Weigh the Risks and Benefits of Entering into a Reciprocal Defense Procurement Memorandum of Understanding (RDP MOU) with the United States

Abstract

This article examines the potential risks and benefits for South Korea of entering into a Reciprocal Defense Procurement Memorandum of Understanding (RDP MOU) with the United States. The purpose of an RDP MOU is to promote rationalization, standardization, and interoperability of defense equipment with foreign allies. To achieve this purpose, an RDP MOU calls for a mutual commitment not to discriminate in the area of defense procurement (supplies, services, and R&D), primarily by waiving “buy national” laws that make it difficult for one party to participate in the defense procurement market of the other. First, as a background, the article examines the international agreements under which the two countries have made certain commitments to open their procurement markets. Second, the article examines the U.S. domestic preference laws (“Buy American” laws), which serve as institutional barriers to defense trade. Third, the overall purpose and functions of RDP MOUs are studied, including whether and to what extent they have benefited other U.S. allies. Lastly, the article examines how South Korea should weigh the risks and benefits of entering into an RDP MOU. While arguing that the defense MOU would greatly strengthen the ROK–U.S. alliance, the article nevertheless concludes that South Korea should conduct a proper prefeasibility study, including a cost-benefit analysis for each covered defense– related procurement, before opening up its defense industry.