By Lee Tae-hoon
Tensions are riding high between Korea and the United States over the former’s purchase plans for the latter’s cutting edge weapons.
The cause of conflict lies on the Defense Acquisition Program Administration’s (DAPA) aggressive push to get a “bargain price” for the latest defense items, including Lockheed Martin’s F-35 Block IIIs, Boeing’s AH-64D Apache helicopter Block IIIs and Sikorsky’s MH-60Rs.
“We have run into a stumbling block over our negotiations because the U.S. government’s position remains firm that it cannot sell its arms products at a lower price than it purchases them for its armed forces,” a DAPA official said.
He explained that Washington has notified Seoul that none of its products to be sold to its allied nations through the Foreign Military Sales (FMS) program, a government-to-government agreement for selling U.S. defense articles, can be offered at a “discounted price.”
The DAPA official also noted that his agency is struggling to make Washington bend the rules of the FMS and sell arms at a fixed price, rather than at an unsettled one that it will offer to its armed forces after concluding price negotiations with U.S. arms contractors.
Multiple industry sources argue that DAPA’s demand to sell FMS-listed products at a “dumping price” cannot be met as it violates domestic U.S law which prohibits the U.S. government from selling defense products at a lower price than that for its armed forces.
“The two sides have extensively discussed the thorny issue and concluded that it is unrealistic for Seoul to demand Washington change the law in such a hurried manner to offer a bargain,” a senior U.S. industry official said.
“No matter how many biddings take place, our price will remain the same – the same price offered to the U.S. forces.”
He claimed that Seoul can rest assured that it will get the best price since the U.S. government, which negotiates prices with defense firms with an order list from domestic and international customers, has greater leverage to get a bargain than the Korean government.
Another industry official, however, noted that U.S. government officials have been working to find a way to “save the face of DAPA chief Noh Dae-lae,” who appears determined to win concessions from Washington.
A senior DAPA official also acknowledged difficulties that his agency faces over what could be seen as “unacceptable demands” but argued that Seoul will continue to get better deals from U.S. competitors.
“Perhaps, we won’t get a discount but we can at least ask for more attractive offset deals through such negotiations,” he said.
He noted that the U.S. government fears that its deal with Korea will set a “bad precedent,” prompting other partner nations to seek a bargain deal at the expense of U.S. taxpayers.