Don’t Miss the Boat: Considerations for U.S.-South Korea Maritime Cooperation

Don't Miss the Boat: Considerations for U.S.-South Korea Maritime Cooperation

Photo: Insung Jeon via Getty Images

Given the potential for future cooperation between the two countries, the impact of these challenges extends beyond South Korea, as the erosion of its shipbuilding base would represent a significant lost opportunity for U.S. maritime competitiveness. At a time when the United States urgently needs to bolster its naval capabilities and secure the resilience of its shipbuilding supply chain, further Chinese dominance in the sector could derail initiatives like the SHIPS for America Act, which seeks to encourage U.S. shipping companies-particularly those participating in the Strategic Commercial Fleet Program-to procure vessels from countries other than China. In this context, sustained and proactive cooperation between South Korea and the United States is not only beneficial but essential.

Considerations in U.S.-South Korea MRO and Shipbuilding Cooperation

Legal Factors

There are two primary U.S. laws that directly influence U.S.-South Korea cooperation in MRO and shipbuilding: 10 U.S.C. 8680, which concerns the maintenance of naval vessels in foreign shipyards and affects MRO operations, and 10 U.S.C. 8679, also known as the Byrnes-Tollefson Amendment, which affects shipbuilding in foreign shipyards.

The first regulation, Maintenance of Naval Vessels, restricts U.S. Navy ships from undergoing maintenance and repairs in foreign shipyards, with limited exceptions. Through the FY 21 National Defense Authorization Act, the law was amended to expand the scope of exceptions, allowing maintenance and repair work to be conducted in allied nations and under specific agreements. However, the exception clause is generally understood to be applied very narrowly. As a result, unless the law is further revised to explicitly support broader MRO cooperation with allies, Korean companies may remain cautious about making significant investments or pursuing active participation.

On the other hand, despite ongoing amendment efforts, the Byrnes-Tollefson Amendment still prohibits U.S. Navy ships from being built in foreign shipyards, including those of allied nations. Only the U.S. president has the authority to waive this restriction for national security reasons. However, it is encouraging that two Republican lawmakers introduced The Ensuring Naval Readiness Act in February 2025, aiming to address the critical shortfall in U.S. naval forces by allowing the outsourcing of naval shipbuilding to allied nations.

Political Factors

On the political front, both countries are undergoing rapid change. In the United States, within just three months of taking office, the Trump administration has already implemented significant shifts in foreign policy, emphasizing "America First" strategies, reshaping alliances, and making notable adjustments in defense and trade policies. Most notably, the new administration has prioritized cooperation with allies based on their willingness to invest in the United States. Previous Korean activities, such as Hanwha Ocean's purchase of and planned investments in Philly Shipyard, are promising developments in this political environment. Additionally, U.S. decisionmaking has become more centralized, following a top-down approach. South Korea, on the other hand, is experiencing political turmoil due to the declaration of martial law last December and just held presidential election in June. This situation has significantly hindered high-level diplomatic engagement with the United States.

Recommendations for U.S.-South Korea MRO and Shipbuilding Cooperation

Cooperation between the United States and South Korea in the maritime sector, driven by the urgent need to rebuild U.S. naval power and shipbuilding capabilities and the advancement of South Korea's shipbuilding industry, could serve as a new milestone for the U.S.-South Korea alliance. To this end, both countries should consider the following policy suggestions.

• Establish a policy framework for all-round cooperation and revise laws.
  
  First, the United States should build consensus to expand the scope of cooperation to include both MRO and new shipbuilding, and revise its legal framework accordingly. Some U.S. experts expect cooperation to remain limited in both areas due to concerns over industrial protection and national security. However, the shipbuilding industry inherently depends on steady and predictable demand to sustain critical infrastructure, including docks, skilled labor, and supply chains. Intermittent MRO contracts alone are insufficient to maintain or grow industrial capacity.
  
  Therefore, rather than restricting cooperation, it would be in the United States' best interest to establish a predictable and structured framework for engagement with allies, which would strengthen the resilience of its maritime industry. While legal and policy adjustments are necessary to facilitate deeper cooperation, the lack of clear signals from the U.S. side could also discourage Korean firms from making strategic investments in U.S. shipbuilding. Korean companies, such as Hanwha Ocean, which recently acquired Philly Shipyard and bought a 9.9 percent stake in Australia's Austal (which owns one of the U.S. shipyards), and HHI, which signed an MOU with Huntington Ingalls and is considering acquiring a shipyard in the United States, have already demonstrated interest in investing in the U.S. market. To further encourage this trend, the United States should actively explore avenues for collaboration and work toward reducing legal and regulatory barriers that discourage foreign investment in the sector.
  
  However, given that South Korea has historically exported primarily support ships rather than frontline combat vessels, it is important to build trust with the United States and gradually expand the scope of cooperation. The United States has so far been reluctant to allow allied nations to participate in the construction of its warships due to national security concerns. However, support vessels present a lower security risk and could serve as a good starting point for broader cooperation. If the United States and South Korea successfully collaborate in this area, it could lay the foundation for more advanced forms of partnership in the future.
• Share plans upfront, provide clear demand signals, and create a flexible infrastructure utilization environment through package agreements.
  
  As outlined in the Department of Defense RSF strategy, providing clear demand signals is essential to encouraging active participation and investment from contractors. This can be achieved by enhancing the operational and contractual aspects of naval ship maintenance and procurement. On the operational side, the U.S. Navy should make its lists of work requests and opportunities clearer by sharing annual ship maintenance schedules in advance. This includes specifying the scope and volume of overhaul and construction work to be commissioned to contractors and coordinated with alliance partners.
  
  Furthermore, as some researchers have argued, the contracting mechanism should evolve from the current practice of treating each overhaul as a separate, definitive fixed-price project to include multi-year contracts for multiple vessels. This approach would not only serve as a clear demand signal but also foster a more flexible infrastructure utilization environment. As a first step, this would involve bundling MRO contracts for multiple vessels into a single agreement. In a subsequent phase, once key issues related to new shipbuilding-such as political consensus, legislative amendments, and coordination between procurement and sustainment budgets-are addressed, the contracting approach could evolve further to combine new ship construction and MRO into an integrated contract.
  
  Early ship retirements are not uncommon, particularly in the U.S. Navy's MRO sector. Given the volatility of this industry, securing multi-year contracts and integrating MRO services into larger package deals is crucial. Establishing a more predictable pipeline of projects through long-term contracts and bundled agreements would help mitigate these risks, ensuring more efficient utilization of facilities and labor. Since providing clear demand signals and fostering a flexible infrastructure environment can also encourage companies to invest, these are all the more important in light of the secretary of the Navy's remarks emphasizing the need to attract capital and skill sets to the United States.
• Start with identifying shared systems to deepen cooperation.
  
  As a meaningful first step-distinct from the two major proposals above-South Korea and the United States should explore shared areas of cooperation, such as identifying common parts and equipment between their warships. Most Korean warships already feature numerous components that are either common to or interoperable with those of the U.S. Navy. For example, the ROK Navy's Jeongjo the Great, the most recently delivered Aegis destroyer built by HHI, is reported to be based on the U.S. Navy's DDG 51 Arleigh Burke class and is equipped with a wide range of U.S. systems. It is powered by GE gas turbines and includes multiple U.S. onboard systems, such as Lockheed Martin's Aegis Combat System and AN/SPY-1D radar, RTX's Phalanx Close-In Weapon System, the AN/SPG-62 fire control radar, and missiles.
  
  In addition, given that HHI already uses U.S. equipment supplied through Foreign Military Sales programs for some ROK Navy ships-and that Hanwha Ocean is currently providing MRO services for U.S. Navy vessels-exploring interoperable systems between the two countries is not only feasible but also a meaningful first step. It can help define the scope and pathways for future cooperation.
  

This is undoubtedly a difficult time for bilateral cooperation. Still, it presents a valuable opportunity to deepen the U.S.-ROK alliance. By identifying mutually beneficial pathways and working through these challenges in close partnership, both nations can not only overcome the current difficulties but also elevate the alliance to a new level of strategic cooperation.

Namyeon Kwon is a visiting fellow with the Korea Chair at the Center for Strategic and International Studies in Washington, D.C. She was most recently an associate research fellow in the Logistics Policy Division of the Resource Management Center at the Korea Institute for Defense Analyses.

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