P 150838Z JAN 09
FM AMEMBASSY SEOUL
TO SECSTATE WASHDC PRIORITY 2930
INFO COMUSKOREA CC SEOUL KOR PRIORITY
SECDEF WASHINGTON DC PRIORITY
COMUSKOREA SCJS SEOUL KOR PRIORITY
SECDEF WASHINGTON DC//OSD/ISA/EAP// PRIORITY
COMUSKOREA J5 SEOUL KOR PRIORITY
NSC WASHINGTON DC PRIORITY

UNCLAS SEOUL 000082 
 
 
PM/SNA AMB JACKSON MCDONALD 
 
E.O. 12958: N/A 
TAGS: MARR PREL PGOV KS
SUBJECT: U.S.-ROK SMA AGREEMENT SIGNED 
 
REF: STATE 03513 
 
¶1. (SBU) In accordance with reftel, Ambassador Kathleen 
Stephens and Foreign Minster Yu Myung-hwan signed the 
U.S.-ROK 2009-2013 Special Measures Agreement (SMA) on 
Thursday, January 15.  Both parties made brief remarks 
following the ceremony underlining the significance of the 
Agreement as a tangible sign of the high degree of 
cooperation that exists between the United States and the 
Republic of Korea. 
 
¶2. (SBU) Prior to the signing Embassy and MOFAT officials 
exchanged diplomatic notes specifying U.S. Forces Korea's 
nine in-kind construction principles.  The diplomatic notes 
were initialed by Political Minister Counselor Joseph Yun and 
MOFAT SMA Ambassador Cho Byung-jae.  Scanned copies of the 
signed agreement and initialed diplomatic notes have been 
sent to both EAP/K and USFK. 
 
¶3. (SBU)  Once the Embassy and MOFAT's entry into force notes 
are available they will be transmitted to L/T. 
 
¶3. (SBU)  The texts of the signed SMA Agreement and initialed 
diplomatic note follows: 
 
------------------------- 
Begin SMA Agreement Text. 
------------------------- 
 
AGREEMENT BETWEEN 
THE UNITED STATES OF AMERICA 
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 REPUBLIC OF KOREA AND THE UNITED STATES OF AMERICA 
REGARDING FACILITIES AND AREAS AND THE STATUS OF UNITED 
STATES ARMED FORCES IN THE REPUBLIC OF KOREA 
 
The United States of America and the Republic of Korea 
(hereinafter referred to as "the Parties") have agreed to 
take the following special measures relating to Article V of 
the Agreement under Article IV of the Mutual Defense Treaty 
between the Republic of Korea and the United States of 
America Regarding Facilities and Areas and the Status of 
United States Armed Forces in the Republic of Korea 
(hereinafter referred to as "the Status of Forces Agreement") 
signed at Seoul on July 9, 1966, as amended, which sets forth 
the principles on the sharing of expenditures incident to the 
maintenance of the United States Armed Forces in Korea, in 
recognition of the goal of a strong and mutual commitment to 
the Republic of Korea - United States of America alliance. 
 
Article I 
 
The Republic of Korea shall bear, for the duration of this 
Agreement, as a special measure relating to Article V of the 
Status of Forces Agreement, a part of the expenditures 
associated with the stationing of the United States Armed 
Forces in Korea.  The contribution of the Republic of Korea 
shall be categorized into Labor Cost Sharing, Logistics Cost 
Sharing, and Republic of Korea Funded Construction. 
Implementation of this Agreement shall be in accordance with 
a separate implementation arrangement between the concerned 
authorities of the Parties. 
 
Article II 
 
This Agreement shall determine the contribution of the 
Republic of Korea for 2009 through 2013. The contribution of 
the Republic of Korea for 2009 is 760 billion Korean Won. The 
2010, 2011, 2012, and 2013 contributions shall be determined 
by increasing the contribution of the previous year by the 
inflation rate (Consumer Price Index) published by the Korea 
National Statistical Office using the 2008 rate for the 2010 
contribution, the 2009 rate for 2011, the 2010 rate for 2012, 
and the 2011 rate for 2013.  Further, the inflation rate used 
for any given year shall not exceed four percent. 
 
Article III 
 
The Labor Cost Sharing contributions shall consist of cash 
support and the Logistics Cost Sharing contribution shall 
consist of in-kind support. Republic of Korea Funded 
Construction shall consist of cash contributions and in-kind 
contributions. Republic of Korea Funded Construction shall be 
gradually shifted to the in-kind contributions from 2009, and 
the contributions of Republic of Korea Funded Construction 
shall be completely in-kind starting from 2011, except for 
expenses associated with design and construction oversight of 
facilities. If unexecuted in-kind contributions of Republic 
of Korea Funded Construction remain at the end of the year, 
those contributions shall roll over to the next year. 
Implementation details of the Republic of Korea Funded 
Construction, such as guiding principles and specific 
procedures, shall be in accordance with separate documents 
between the concerned authorities of the Parties. 
 
Each year's Labor Cost Sharing payments shall be made in 
three equal payments on or before April 1, June 1, and August 
1 of that year. Republic of Korea Funded Construction 
contributions provided in cash shall be paid, before the 
completion of the shift, in two equal payments with 50 
percent paid on March 1 of the program year and 50 percent 
paid one year later (March 1). After the completion of the 
shift, expenses associated with design and construction 
oversight of facilities shall be paid on March 1 of each 
program year. 
 
Article IV 
 
All materials, supplies, equipment and services provided as 
part of the in-kind contribution shall be exempt from 
Republic of Korea taxes, or provided on an after-tax basis. 
Such materials, supplies, equipment and services procured by 
the Government of the Republic of Korea shall be exempt from 
individual consumption taxes and value added taxes.  In the 
case of value added taxes, the zero rate shall be applied. If 
taxes are levied against any such materials, supplies, 
equipment or services, payment of such taxes shall not be 
made from cost-sharing funding. 
 
Article V 
 
This Agreement shall enter into force upon the date of the 
exchange of written notification by the Parties that their 
respective domestic legal procedures necessary for the entry 
into force of this Agreement have been completed, and shall 
remain in force until December 31, 2013. 
 
The termination of this Agreement shall not affect the 
carrying out of any Republic of Korea Funded Construction 
projects which are selected every year in accordance with the 
agreed procedures under this Agreement, and not fully 
executed as of the date of termination of this Agreement. 
 
Article VI 
 
The Parties may consult on all matters regarding this 
Agreement through the Joint Committee provided for in 
Paragraph 1 of Article XXVIII of the Status of Forces 
Agreement, or through the Joint Cost-Sharing Committee, which 
is composed of representatives appointed by the Parties. 
 
Article VII 
 
This Agreement may be revised or amended in writing by mutual 
consent. The revision or amendment of this Agreement shall 
enter into force on the date when the Parties exchange 
written notifications that their domestic legal requirements 
for such revision or amendment have been fulfilled. 
 
IN WITNESS WHEREOF, the undersigned, duly authorized for the 
purpose, have signed this Agreement. 
 
DONE at Seoul this 15th day of January 2009, in duplicate, in 
the Korean and English languages, both texts being equally 
authentic. 
 
 
FOR THE UNITED STATES OF AMERICA 
FOR THE REPUBLIC OF KOREA 
 
End Text. 
 
--------------------------- 
Begin Diplomatic Note Text. 
--------------------------- 
 
No. 021 
 
The Embassy of the United States of America presents its 
compliments to the Ministry of Foreign Affairs and Trade of 
the Republic of Korea and has the honor to refer to recent 
discussions between representatives of our two governments 
regarding the Agreement between the Republic of Korea and the 
United States of America concerning special measures relating 
to Article V of the agreement under Article IV of the Mutual 
Defense Treaty between the Republic of Korea and the United 
States of America regarding facilities and areas and the 
Status of United States Armed Forces in the Republic of Korea 
signed on January 15, 2009 (hereinafter referred to as "the 
SMA") and proposes that the in-kind construction 
contributions be implemented in accordance with the following 
principles: 
 
(1) The Republic of Korea Funded Construction remains under 
the SMA. 
 
(2) The United States of America, after consultation with the 
Republic of Korea, selects and prioritizes construction 
projects based on military needs. 
 
(3) The Republic of Korea awards construction contracts and 
implements construction projects in accordance with the 
corresponding timeline as identified and developed during 
project design. 
 
(4) The United States is responsible for project design. 
 
(5) The United States provides design specifications and a 
list of acceptable contractors to the Republic of Korea. 
Contractors shall be Republic of Korea companies selected 
from the United States Army Corps of Engineers Far East 
District's Pre-Qualified contractor list. 
 
(6) Design and Construction oversight, which averages twelve 
(12) percent of the total project costs, is paid by the 
Republic of Korea in cash. 
 
(7) Any bid savings shall be used for future projects. 
 
(8) The United States and the Republic of Korea shall 
establish proper procedures to prevent unexecuted 
contributions. In the unlikely event that unexecuted 
contributions exist at the end of the year, those 
contributions shall roll over to the next year. 
 
(9) An annual review system shall be established to ensure 
"in-kind" procedures are working. For the project or projects 
where it is determined "in-kind" procedures are not working, 
the Republic of Korea and the United States shall consult in 
an effort to resolve the problem, and take proper actions to 
complete the project or projects including providing cash to 
the United States. 
 
Thirty (30) percent of the 2009 Republic of Korea Funded 
Construction contribution shall be provided by the Republic 
of Korea in-kind, sixty (60) percent of the 2010 Republic of 
Korea Funded Construction contribution shall be provided by 
the Republic of Korea in-kind, and from 2011 to 2013 
eighty-eight (88) percent of the Republic of Korea Funded 
Construction contribution shall be provided by the Republic 
of Korea in-kind. 
 
If the foregoing is acceptable to the Republic of Korea, the 
Embassy has the honor to propose that this note, together 
with the Ministry's reply, shall constitute an agreement 
between the two governments, which shall enter into force at 
the same time as the SMA. 
 
The Embassy of the United States of America avails itself of 
this opportunity to renew to the Ministry of Foreign Affairs 
and Trade the assurances of its highest consideration. 
 
Seoul, January 15, 2009. 
 
 
Reply Note: 
OSJ 2009- 
 
 
The Ministry of Foreign Affairs and Trade of the Republic of 
Korea presents its compliments to the Embassy of the United 
States of America and has the honor to refer to the Embassy's 
note 021 dated January 15, 2009, which reads as follows: 
 
The Embassy of the United States of America presents its 
compliments to the Ministry of Foreign Affairs and Trade of 
the Republic of Korea and has the honor to refer to recent 
discussions between representatives of our two governments 
regarding the Agreement between the Republic of Korea and the 
United States of America concerning special measures relating 
to Article V of the agreement under Article IV of the Mutual 
Defense Treaty between the Republic of Korea and the United 
States of America regarding facilities and areas and the 
Status of United States Armed Forces in the Republic of Korea 
signed on January 15, 2009 (hereinafter referred to as "the 
SMA") and proposes that the 
in-kind construction contributions be implemented in 
accordance with the following principles: 
 
(1) The Republic of Korea Funded Construction remains under 
the SMA. 
 
(2) The United States of America, after consultation with the 
Republic of Korea, selects and prioritizes construction 
projects based on military needs. 
 
(3) The Republic of Korea awards construction contracts and 
implements construction projects in accordance with the 
corresponding timeline as identified and developed during 
project design. 
 
(4) The United States is responsible for project design. 
 
(5) The United States provides design specifications and a 
list of acceptable contractors to the Republic of Korea. 
Contractors shall be Republic of Korea companies selected 
from the United States Army Corps of Engineers Far East 
District's Pre-Qualified contractor list. 
 
(6) Design and Construction oversight, which averages twelve 
(12) percent of the total project costs, is paid by the 
Republic of Korea in cash. 
 
(7) Any bid savings shall be used for future projects. 
 
(8) The United States and the Republic of Korea shall 
establish proper procedures to prevent unexecuted 
contributions. In the unlikely event that unexecuted 
contributions exist at the end of the year, those 
contributions shall roll over to the next year. 
 
(9) An annual review system shall be established to ensure 
"in-kind" procedures are working. For the project or projects 
where it is determined "in-kind" procedures are not working, 
the Republic of Korea and the United States shall consult in 
an effort to resolve the problem, and take proper actions to 
complete the project or projects including providing cash to 
the United States. 
 
 
Thirty (30) percent of the 2009 Republic of Korea Funded 
Construction contribution shall be provided by the Republic 
of Korea in-kind, sixty (60) percent of the 2010 Republic of 
Korea Funded Construction contribution shall be provided by 
the Republic of Korea in-kind, and from 2011 to 2013 
eighty-eight (88) percent of the Republic of Korea Funded 
Construction contribution shall be provided by the Republic 
of Korea in-kind. 
 
 
If the foregoing is acceptable to the Republic of Korea, the 
Embassy has the honor to propose that this note, together 
with the Ministry's reply, shall constitute an agreement 
between the two governments, which shall enter into force at 
the samQime as the SMA. 
 
The Embassy of the United States of America avails itself of 
this opportunity to renew to the Ministry of Foreign Affairs 
and Trade the assurances of its highest consideration. 
 
Seoul, January 15, 2009. 
 
 
The Ministry of Foreign Affairs and Trade of the Republic of 
Korea has the honor to inform the Embassy of the United 
States of America that the proposals set forth in the 
Embassy's note are acceptable to the Republic of Korea and to 
agree that the Embassy's note and this note shall be regarded 
as constituting an agreement between the two governments, 
which shall enter into force at the same time as the SMA. 
 
The Ministry of Foreign Affairs and Trade avails itself of 
the opportunity to renew to the Embassy of the United States 
of America the assurances of its highest consideration. 
 
Seoul, January 15, 2009 
 
End Text. 
 
 
 
STEPHENS