Magazine article National Defense

Industry Suggests Improvements for Exports

Magazine article National Defense

Industry Suggests Improvements for Exports

Article excerpt

The Bush administration is conducting a comprehensive review of defense trade export policy. The White House initiated the review--commonly known as NSPD-19-in an effort to identify changes needed to protect the country's national-security and foreign-policy interests.

Today's defense trade policies and regulations do not reflect current realities-first, the current cooperation and collaboration required for the U.S. defense industry to supply best value for U.S. programs and, second, the growing effect of the globalization of the defense market. Previous reviews have not resulted in the wholesale revision of the export regime that was once anticipated.

The U.S. Departments of Commerce, Defense and State, along with other federal agencies, have been tasked with conducting the review. Industry has provided comments to several defense-related agencies, via industrial working groups hosted by organizations such as NDIA and the Defense Trade Advisory Group. DTAG was created by the State Department to provide an industry viewpoint on defense trade-related policies.

Earlier this year, the Center for Strategic and International Studies hosted a discussion panel with members of industry, DTAG and the Defense Trade Security Agency on NSPD-19. At this meeting, William Schneider, chairman of the DTAG, presented industry recommendations. Among the key points:

Although the statutory basis for arms transfers are appropriate and legitimate instruments of foreign policy, these policy objectives need to be supported and restated with clarity. Arms transfers, defense industrial cooperation and foreign direct investment in the U.S. defense market support the goals of alliance solidarity and military interoperability.

The globalization of the scientific and industrial base reinforces the need to expedite the development of an alliance-wide industrial base. Such a base will help both to reduce excess capacity and to focus the alliance defense industrial base upon the economic concepts of comparative advantage and specialization of labor. This will enable it to be a far more efficient instrument for creating defense capabilities and a diminished source of transatlantic friction.

Existing U.S. policy should be revised to permit U.S. government entities to use appropriated funds to advocate arms transfers. Arms transfer advocacy should not discriminate between foreign military sales and direct commercial transactions.

The security assistance program needs to be reformed to make it a more flexible instrument able to deploy appropriated funds effectively to serve U.S. foreign policy interests. The Defense Export Loan Guarantee (DELG) program is a $15 billion loan-guarantee program that can effectively parallel the aims of the security assistance program by providing a source of funds to finance defense exports that does not depend upon appropriated funds.

The nature of the globalized defense sector has enabling technology frequently developed offshore as well by a high-tech internationally mobile labor force. Moreover, the evolution of Europe's institutions reflects a migration away from exclusively national regulation.

The defense industry is likely to develop a global presence and a need to move products between company operating units in the United States and subsidiary organizations abroad. Therefore, the definition of a "U.S. person" from a defense trade regulatory perspective (including dual-citizens) is an area that needs to be addressed.

The definition of "deemed exports," definitions of citizenship and the manner in which dual-citizens, permanent residents and foreign nationals are treated for export control purposes also must be addressed. …

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