South Korean Yards Want to Build U.S. Navy Warships in Korea

South Korea's business leaders are aware of criticism that a multi-billion-dollar diplomatic agreement to invest in the U.S. market could dent future plans for investment at home, since so much of South Korea's industrial talent and capital will be going overseas to the United States. They are responding with assurances of continued domestic spending; but they are also hoping to balance the arrangement by building more products for U.S. customers within Korea - including U.S. naval vessels, according to Chosun Daily and Maeil Business News.

"The Korean shipbuilding industry is also preparing for U.S. business in a mutually beneficial direction," HD Hyundai Chairman Chung Ki-sun told Maeil last week. "Easing regulations on the defense sector in the U.S. is an important task."

"We have decided to seek institutional improvements to enable even the construction of US Navy vessels within South Korea," confirmed President Lee Jae-Myung last week.

Buying U.S. Navy vessels from foreign yards is currently prohibited by law, and doing it would require American political leaders to change or waive 10 USC §8679. The plan, according to Chosun Daily, is to start with overhauls of naval auxiliary vessels, like fleet oilers; then proceed to overhauls of U.S. Navy combatant vessels; and then lastly, to pursue U.S. Navy newbuild construction contracts, only after finding a way around the legal prohibition on foreign construction of U.S. warships.

The first step has already been done, starting with a successful yard period for USNS Wally Schirra (T-AKE-8) earlier this year. The second step is under way: in a deal formalized last week, the U.S. and Korea agreed to "further expand cooperation in shipbuilding and Maintenance, Repair, and Overhaul (MRO) . . . to include combat ships," according to Minister of National Defense An Kyu-baek.

Moving beyond repair to include new construction would require several legal steps in the United States. The Trump administration could waive the foreign-shipyard legal requirement, and has the authority to do so. The White House has already placed overseas orders by buying a series of Coast Guard icebreakers from Finnish shipyards, without significant pushback from Congress.

"Last month, U.S. Coast Guard ships could be built in Finland under U.S. President Donald Trump's order, and this could be applied to the Korea-U.S. shipbuilding cooperation project," HD Hyundai Chairman Chung Ki-sun told Maeil. "We are explaining it to the U.S. government at the corporate level, but we ask for special attention and support at the [Korean] government level."

Chosun notes that there is one more small political obstacle: Congress currently inserts a no-foreign-build clause in the annual defense appropriation bill, and this would need to be omitted or waived as well if orders were to proceed at scale.