Defense Acquisition Chief: "China's Sanctions on Hanwha Ocean Will Clearly Impact MASGA"

Assemblyman Yoo Yongwon:
"Estimated Losses of $60 Million Over 1-2 Years"

On October 17, Defense Acquisition Program Administration Commissioner Seok Jonggeon addressed China's recent announcement of sanctions against Hanwha Ocean's U.S. subsidiary, stating, "Since there are ongoing transactions and signed contracts, there will likely be no immediate impact. However, considering various issues, it is clear that there will eventually be an impact on the MASGA project."

During a National Assembly National Defense Committee audit of the Defense Acquisition Program Administration held earlier that morning, Commissioner Seok responded to a question from Assemblyman Yoo Yongwon of the People Power Party, who estimated that Hanwha Ocean's Philippine shipyard could incur losses of 60 million dollars (approximately 85 billion won) over the next one to two years due to these Chinese sanctions. Seok stated, "There has not yet been any analysis regarding the amount of losses at Hanwha Ocean's Philippine shipyard," but nonetheless acknowledged the potential impact.

Yonhap News Agency

Commissioner Seok explained, "Basically, regarding the Philippine shipyard, it will not be possible to manufacture many of the necessary components for shipbuilding in the United States. If that is the case, many components will have to be shipped from Korea to the United States, and if there are sanctions related to this, there will inevitably be an impact."

Commissioner Seok also responded to Assemblyman Yoo's point that the prompt conclusion of the Republic of Korea-U.S. Reciprocal Defense Procurement Agreement (RDP-A) is essential for participation in the defense procurement market, saying, "The Defense Acquisition Program Administration is also in discussions regarding the RDP-A. The U.S. Department of Defense and other agencies are awaiting guidance from the White House on the agreement, and we are fully conveying our intentions and making efforts on our end."

In the United States, under the Byrnes-Tollefson Amendment, military vessels can only be built in shipyards located in the U.S. and owned by Americans. If the RDP-A is concluded under these circumstances, Korean vessels and aircraft would be recognized as 'qualifying country products,' allowing participation in U.S. government procurement projects. However, negotiations on this agreement have been stalled for two years.