- China announced sanctions on five Hanwha-affiliated firms, including its U.S. shipyard, raising concerns about future impacts on the MASGA program.
- South Korea’s DAPA chief said that while no immediate contract under MASGA has been signed, sourcing equipment from outside the U.S. could become more difficult.
South Korea’s Defense Acquisition Program Administration (DAPA) chief Seok Jong-gun warned this week that Chinese sanctions targeting Hanwha Ocean’s U.S.-based shipbuilding affiliates could eventually affect the U.S.-Korea naval cooperation project known as MASGA (Make American Shipbuilding Great Again).
During a National Assembly defense committee hearing on Thursday, Seok said, “While there is no immediate impact, it could eventually influence the MASGA project.” His remarks were in response to concerns raised by Rep. Yoo Yong-won over projected damages exceeding $60 million, or about 85 billion won.
The Chinese Ministry of Commerce recently announced it would prohibit Chinese entities from conducting business with five companies, including Hanwha Philly Shipyard and Hanwha Shipping. The sanctions are seen as a response to U.S. defense export controls.
Hanwha Ocean, a major player in Korea’s naval shipbuilding industry, is a key participant in the MASGA program, a joint initiative aimed at revitalizing U.S. shipbuilding capacity through cooperation with Korean firms. President Lee Jae-myung visited the Philadelphia yard during his August trip to Washington, underlining Seoul’s commitment to the project.
Although formal contracts under the MASGA framework have not yet been finalized, Seok said that sourcing components from outside the U.S. could become more difficult. “There will clearly be an impact, especially when acquiring necessary materials and equipment from outside the United States,” he said.
However, he clarified that no official damage assessment has been completed.
Seok also addressed South Korea’s efforts to finalize a Reciprocal Defense Procurement Agreement (RDP-A) with the United States, which would allow Korean defense products to be treated as domestically produced items in U.S. government acquisitions.
He noted that the agreement is currently awaiting approval by the U.S. National Security Council and emphasized its importance to the MASGA initiative. “We are conveying our position with full clarity,” Seok said.
On a separate issue, Seok acknowledged delays in the Korea Destroyer Next-Generation (KDDX) program, South Korea’s indigenous stealth destroyer development project.
The KDDX project, which involves building six ships at an estimated cost of 7.8 trillion won ($5.7 billion), was initially slated to move into detailed design and lead ship construction in 2024. But legal disputes and competition between Hanwha Ocean and HD Hyundai Heavy Industries have stalled progress.
“Looking back, we should have made decisions more actively in the early stages,” Seok said. “Now, resolving the problems is taking too much time and money.”
He added that a renewed effort will be made to manage the program more closely moving forward.
The tension escalated earlier this year when DAPA extended its security-related penalty against HD Hyundai Heavy Industries by another year, citing a military confidentiality breach. This move has deepened the standoff between Korea’s two largest naval shipbuilders.