South Korean authorities said marine engineering company SI Innotec’s $12 million contract to supply equipment to a Taiwanese shipbuilder posed a national security threat because it might trigger economic sanctions from its top trading partner, China, which claims Taiwan as its territory.
According to a Feb. 17, 2022, police affidavit obtained by Reuters, SI Innotec’s delivery of welding and assembly equipment for submarine pressure hull manufacturing to CSBC violated South Korea’s trade laws. Kaohsiung-based CSBC is a government contractor working on Taiwan’s new military submarine program.
The affidavit, which sought the arrest of SI Innotec Executive Director Park Mal-sik in connection with the allegations of trade law violations, said China could ban South Korean exports because of SI Innotec’s activities with CSBC, noting how Beijing imposed sanctions in 2016 to protest Seoul’s installation of THAAD, a U.S. anti-missile system.
The police also pointed to China’s agitation over a 2021 Reuters report about defense contractors and experts supporting Taiwan’s submarine program. It consulted the matter with the Defense Acquisition Program Administration, Korea’s arms sales regulator, which it said had Taiwan-related export concerns akin to “a second THAAD deployment.”
Besides SI Innotech, defense engineering subcontractors Keumha Naval Technology and S2&K are also facing trade violation charges. According to sources, KHNT CEO Yang Hyang-kweon was accused of transferring a submarine component to Taiwan for a torpedo launching tube, an S2&K area of specialty.