The Donald Trump administration has notified South Korea of its decision to abolish a development cost waiver for certain US arms purchases. This move is set to increase the financial burden on the Asian ally, which has committed to spending $25 billion on US military equipment by 2030. Multiple sources said the notification came in August.
The Trump administration informed the Seoul government in August that it will end the waiver of "non-recurring" costs (NCs) — one-time expenses associated with the research, development or production of certain defense equipment, according to informed sources.
The United States' Arms Export Control Act requires the Pentagon to recover NCs for certain weapons sold through the government-to-government Foreign Military Sales (FMS) program, as the US government covers the costs with taxpayer money to develop or produce weapons, particularly for the US military.
The law permits the costs to be waived in certain cases, such as advancing US interests in standardizing equipment with allies like South Korea, Japan, Australia, New Zealand or Israel, and avoiding a situation in which the charge would result in the loss of the weapons sale.
In past FMS cases, South Korea was granted the NC waiver. But the abolition would increase the cost South Korea has to pay to import US weapons at a time when it has committed to spending $25 billion on US military equipment purchases by 2030.
Sources said that Japan, Australia and other countries are also known to have been notified of the waiver abolition.
The Pentagon did not comment when asked by Yonhap News Agency to confirm the suspension of the waiver.
The Trump administration has been implementing its "America First" policy, doubling down on its agenda for "fair" and "reciprocal" trade with a pledge to be a good steward of taxpayer money.