Taking cooperative alternatives to reciprocal procurement

In an era of higher domestic content requirements and tighter review, a shipbuilding-focused agreement aligned with MASGA could turn stalemate into incremental progress.

Hwa Yu

The author is CEO of Delta One LLC, a U.S. consulting firm specializing in industrial cooperation, offsets, Cybersecurity Maturity Model Certification (CMMC).

Brian Hobbs

The author is an independent defense and aerospace analyst with a PhD from Virginia Tech, with a focus on offsets.

A familiar standoff persists in U.S.-Korea defense trade relations. At a September 17, 2025 conference hosted by the Center for Strategic and International Studies (CSIS) with the ROK Defense Acquisition Program Administration (DAPA), both nations reiterated their entrenched positions on a Reciprocal Defense Procurement Agreement (RDP-A). The United States defines “reciprocity” as fair market access without Korea’s mandatory offsets, while Korea insists offsets are essential to its industrial development, offering only to refine practices and relax Buy Korean rules. The distance between those positions suggests a comprehensive RDP-A remains elusive.

A practical alternative exists: an agreement centered on U.S.-Korea shipbuilding partnerships. This narrower framework would align with the “Make America’s Shipbuilding Great Again” (MASGA) initiative while relying on scored industrial participation rather than rigid offset quotas — a model that could bridge the divide.

“Buy American” is a bipartisan doctrine. Successive administrations have tightened rules by raising domestic-content thresholds, scrutinizing waivers, and centralizing oversight. The first Trump Administration increased civilian thresholds from 50 to 55 percent and pressed agencies to maximize U.S.-made procurement. The Biden Administration created the Made in America Office (MIAO) within the Office of Management and Budget, boosted waiver transparency and set staged content requirements of 60 percent in 2022, 65 percent in 2024 and 75 percent by 2029. The current Trump Administration has further reduced waivers to reinforce domestic manufacturing.

President Lee Jae Myung takes photos with Hanwha officials at the Hanwha Philly Shipyard in Philadelphia, Pennsylvania, on Aug. 26. [YONHAP]

Reciprocal procurement arrangements have come under closer review. RDP-As are secretary-level agreements that waive Buy American requirements for Department of Defense (DOD) contracts on a reciprocal basis. While once managed largely by the Pentagon, they now involve MIAO, Commerce, State and the U.S. Trade Representative.

In 2024, the Government Accountability Office (GAO) found that despite 28 active RDP-As, agencies had not consistently consulted industry or assessed effects on America’s industrial base, particularly in services. GAO urged better initiation, renewal and monitoring. Members of Congress, including Rep. John Garamendi, Sen. Debbie Stabenow, Sen. Jim Banks and Sen. Tammy Baldwin, have pressed for closer scrutiny to ensure agreements do not undermine U.S. jobs. Demonstrating genuine reciprocity has become politically essential.

Offsets remain the central obstacle. None of the 28 existing RDP-As explicitly prohibit offsets, though most seek to limit adverse effects. Negotiations with Brazil, India and Korea have stalled, as all require foreign contractors to provide investment, technology transfer or industrial cooperation.

For U.S. stakeholders, offsets negate Buy American benefits and block genuine market access. For Korea, offsets are a vital tool for industrial growth and politically impossible to discard. With both sides firmly entrenched, the challenge is finding where cooperation can move forward despite the divide.

Shipbuilding offers a realistic path. The United States seeks to revitalize this sector to sustain its naval power, while Korea holds unmatched global expertise. Korea’s evolution from licensed KF-16 production to development of the KF-21 fighter demonstrates a model for U.S. shipbuilding revitalization.

A MASGA-aligned shipbuilding framework would allow strategic teaming and remove domestic preference barriers. For the United States, it would localize high-value work, expand capacity, shorten delivery timelines and spur innovation spillovers. For Korea, it would deepen collaboration with its treaty ally while broadening business opportunities.

Long-standing U.S. policy views offsets as economically inefficient and trade-distorting. Rather than impose rigid obligations, industrial participation can be treated as one evaluation factor among cost, schedule, technical merit, sustainment and supply chain security. Korea has already begun reframing offsets as “industrial cooperation,” but details will matter. Properly designed, the system allows any bidder to compete while building industrial capacity and meeting U.S. reciprocity tests applied by GAO, MIAO and Congress. If both U.S. and Korean firms can succeed under the same scoring rubric, reciprocity is demonstrated by results rather than rhetoric.

Instead of striving for a comprehensive RDP-A, both nations could negotiate a limited agreement covering only shipbuilding. Such a framework would formally recognize industrial participation as a scored factor rather than a mandatory quota.

This approach balances political imperatives. It shows reciprocity in practice by focusing on mutual interests and avoids the gridlock surrounding offsets. By creating a constituency and evidence base, it would also lay groundwork for any future, broader RDP-A that must withstand oversight and public scrutiny.

In an era of higher domestic-content requirements and tighter review, a shipbuilding-focused agreement aligned with MASGA could turn stalemate into incremental progress. It represents a pragmatic step toward deeper defense trade cooperation that neither side’s political climate currently allows in comprehensive form.