Page 180 - 2018 Defense White Paper

for the USFK. Defense burden sharing is an exception to Article 5 7) of the SOFA, which states

that the U.S. bears all expenditures for the stationing of the USFK in the ROK. The ROK
started its contribution in 1991 following the Special Measures Agreement (SMA 8) ). In 2018, the
th
contribution was made in accordance with the 9 edition of the SMA. 9)
The defense burden sharing cost consists of three categories—labor cost, the ROK-funded
construction, and logistics cost. The ROK and the U.S. divide and allocate the total amount of
annual defense budget sharing to the three categories and spend the budget in accordance with

the procedures agreed upon by both sides during the signing of the SMA. The total amount of
annual defense burden sharing is set to a reasonable level via close consultations between the
two countries with comprehensive considerations of the USFK’s contribution to the defense of

the Korean Peninsula and the need to provide a stable stationing environment for the USFK,
the ROK’s f inancial capacity, and the security situation on the Korean Peninsula. 10)
Most of the defense burden sharing cost has been redirected to the ROK economy, contributing
to job creation, domestic consumption growth, and regional economic development. All of the

labor cost has been paid to the ROK citizens working for the USFK Command, while 88% of
ROK funded construction—with the remaining 12% being design and construction oversight

costs—and 100% of the logistics cost is supported by domestic contractors in kind (facilities,
equipment, and service, etc.)

7) Article 5 of the SOFA (Facilities and Areas—Cost and Maintenance) provides the following:
• 1. The United States will bear, without cost to the ROK, all expenditures incident to the maintenance of the USFK.
• 2. The ROK will furnish, without cost to the United States, all facilities and areas.
8) The official title of the SMA is the “Agreement between the United States and the Republic of Korea Concerning
Special Measures Relating to Article V of the Agreement under Article IV of the Mutual Defense Treaty between
the United States and the Republic of Korea regarding Facilities and Areas, and the Status of the United States
Armed Forces in the Republic of Korea.”
9) The United States not only covered all expenditures for the maintenance of the USFK following Article 5 of
the SOFA but also funded and constructed most of the facilities that the ROK was supposed to provide in
consideration of the ROK government’s financial conditions. Due to the deterioration of the United States financial
situation and the ROK’s economic growth, the ROK and the United States signed the SMA in 1991. Since then,
the ROK has shared a portion of the USFK’s stationing costs.
10) The amount of the defense burden sharing cost paid by the ROK was set at KRW 920 billion in 2014 following
th
the 9 SMA concluded in February 2014. The amount of annual contribution between 2015 and 2018 will be
decided considering the previous year’s defense burden sharing amount and the consumer price index (CPI)
from two years earlier. Future increments shall be no more than 4% of the previous year’s annual contribution.

178 Chapter 5 Development of the ROK–U.S. Alliance, and Expansion of Defense Exchanges and Cooperation