Magazine article National Defense

Defense Export Reform Plan Will Boost Industry Alliances

Magazine article National Defense

Defense Export Reform Plan Will Boost Industry Alliances

Article excerpt

Closer ties between the United States and its military allies cannot be achieved by governmental activities only, said a top Pentagon official in charge of industrial policy. The participation of the private sector-in this case, the defense contractors-is vital to this endeavor, he asserted.

Jeffrey P Bialos is the deputy undersecretary of defense for industrial affairs. He recently sat down with National Defense to discuss his role in bolstering industrial relationships between American and allied nations' defense firms and the consequences those partnerships have on U.S. national security.

To strengthen the NATO alliance, said Bialos, the United States needs "increased technology sharing with coalition partners." His beliefs reflect the changing ways of thinking at the Pentagon, where officials increasingly are more interested in ensuring military allies have technology that is compatible with U.S. systems and that U.S. defense contractors have access to allies' arms markets.

"We can't just do this government to government," Bialos said. "We need to have enhanced industrial linkages between firms in the United States and those of our coalition partners." These allies, however, should have technology-transfer policies that, like the United States, would preclude the sharing of sensitive technologies with potential enemy nations.

The goal, said Bialos, is to have healthy competition in the marketplace, but also security. Trans-Atlantic mergers, acquisitions or joint ventures will be endorsed by the Pentagon, he added, "when they are pro-competitive and pro-security."

International Partnerships

Bialos believes that the private sector often can be more effective than the government in developing long-lasting international partnerships. "Through industrial cooperation and technology sharing, you are more likely to end up with solutions that are commercially-driven, real solutions rather than top-down (government mandated] standards," he said.

But the biggest hurdle currently standing in the way of closer defense ties is the export licensing process required by the U.S. government, said Bialos. His comments echoed remarks delivered a week earlier by the Pentagon's principal deputy undersecretary for acquisition and technology, David R. Oliver Jr. He had told an industry audience that "export process reform" was the Defense Department's "number one priority."

It turns out, said Bialos, that "export controls is the main impediment to enhanced industrial cooperation between the United States and Europe."

Unless the policies change, he said, it will become more difficult to convince European allies that it is worth enduring the delays and cumbersome bureaucracy that today prevail in the export-licensing business. "We have systems that are somewhat antiquated, designed with the Cold War in mind," Bialos said. Today's procedures do not take into account that a particular foreign country purchasing U.S. equipment might be an ally. Everyone gets the same level of scrutiny. Bialos believes there should be less restrictive licensing requirements for coalition partners such as the United Kingdom and Australia. About 30 percent of U.S. defense exports go to those two nations.

Under the Defense Department's plan, export control reform would be underpinned by three tenets:

Extending the exemptions currently given to Canada (under the international traffic in arms regulations, or ITAR) to allies, such as NATO countries, assuming these allies agree to "level up on security. …

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