Go to contents

Trump proposes $1.3 billion agreement for defense cost sharing

Trump proposes $1.3 billion agreement for defense cost sharing

Posted May. 15, 2020 07:42,   

Updated May. 15, 2020 07:42


U.S. President Donald Trump has reportedly proposed 1.3 billion dollars for South Korea’s share of defense costs for United States Forces Korea (USFK) with a one-year term. The South Korean government has previously suggested a five-year agreement with 1.3 billion dollars paid in the fifth year, but President Trump countered it with a proposal for South Korea to pay 1.3 billion dollars this year.

The South Korean government has presented a plan to increase its share of defense costs for this year by 13 percent from the previous year and apply an annual increase rate of seven to eight percent for the next five years, a source on the bilateral negotiations said on Thursday. The working-level negotiation groups of the two countries have tentatively agreed on the plan at the end of March. Under such a plan, South Korea will pay about 1.17 trillion won this year as its share of defense costs for USFK while the annual figure will go up about seven percent every year to approximately 1.54 trillion won, which is similar to 1.3 billion dollars, in 2024, the last year of the plan.

However, it has been reported that President Trump has instructed his staff to obtain 1.3 billion dollars this year, not the last year, after receiving reports on the working-level negotiation results. According to his counter proposal, South Korea should pay 53 percent more this year and the next year’s amount will be re-negotiated using 1.3 billion dollars as a baseline.

The total amount and annual increase rate upon which bilateral working-level negotiation groups have tentatively agreed are more than the Special Measures Agreement (SMA). Increase rates have been maintained under 10 percent since the mid-2000s, including 8.2 percent for the one-year 10th SMA, as well as 6.6 percent for the 7th in 2007, 2.5 percent for the 8th in 2009, and 5.8 percent for the 9th in 2014. It is unusual for South Korea to commit to a seven percent fixed increase rate, disregarding its principle to apply inflation rates as annual increase rates but no more than four percent for a multi-year agreement.

Na-Ri Shin journari@donga.com · Gi-Jae Han record@donga.com