Now that the U.S. government has unveiled a list of reform proposals
to streamline the export control process for defense equipment,
the next step for industry is to decide how it will help the government
implement these reforms as smoothly and quickly as possible. Defense
and State Department officials outlined 17 reform proposals, under
the Defense Trade Security Initiative, during a conference of NATO
foreign ministers last month. These measures are encouraging proof
that Defense and State can work together effectively in this important
arena. We hope that they also usher in a new era of government-industry
cooperation on defense matters.
Defense and State developed the initiatives with the underlying
goal of reducing the frequency with which industry must contact
the government during the export license approval process. At first
look, we believe they succeeded.
The reform initiative, for example, would offer ITAR (International
Trade in Arms Regulations) exemptions to qualified countries. Only
Canada was granted such an exemption in the past. To qualify, an
allied nation would have to prove it has “congruent and reciprocal”
policies with the United States in export controls, industrial security,
intelligence and law enforcement. For the Defense Department, this
is a critical step in its effort to extend ITAR exemptions to the
United Kingdom and to Australia—top U.S. allies that should
be able to get U.S. technology more easily than other countries.
The Defense Trade Security Initiative was especially designed to
support NATO’s wishes to obtain access to certain critical
U.S. military capabilities. That wish list was unveiled last year
at the NATO summit in Washington, D.C. The goal is to ensure that
the alliance has conventional military forces designed and equipped
for 21st century missions, and that those forces be interoperable
with U.S. equipment. As we learned during the air war over Kosovo
last year, the interoperability is not always there, which is detrimental
to U.S. security.
Another reform involves the ability of the U.S. government to approve
“major program licenses,” which would include hardware,
technical data and services, and would be issued at the beginning
of a project where a U.S. firm is the prime contractor. These broad
licenses would eliminate the need to request individual licenses
for each system component and would last for up to eight years (vs.
four currently). Obviously, this would greatly diminish the number
of times that industry is forced to contact government officials
in the license approval process, thus making the cycle more efficient
for all.
Other types of broad export licenses would be applicable to commercial
sales to allies for international cooperative projects. Particularly
noteworthy is a proposal to enhance the use of “overseas warehousing
agreements,” so that large numbers of items can be sold to
a foreign country, with provisions for re-export of the equipment
to pre-approved customers.
Other proposals include streamlining the process of approving licenses
for satellite systems and for maintenance and training equipment.
These are important because U.S. firms have been leaders in these
fields and should not be losing ground in the global market competition
because of the U.S. export regulations.
At NDIA, we are pleased that these reforms are being adopted and
that no new legislation is required to do so. But, as the saying
goes, the proof of the pudding is in the eating.
Our International Committee and our Government Policy arm have
been developing ideas on how industry can assist in this process.
We are part of a multi-association coalition that has been involved
during the past several months in developing a TurboTax-style software
program for export license applications. That effort is moving along
and it appears that the technology will help a great deal in making
the license application process less cumbersome for industry and
government officials.
One of the key players in the export control debate is the principal
deputy undersecretary of defense for acquisition, technology and
logistics, David Oliver. He has been at the forefront of the reform
effort and is now ready to meet with industry representatives to
discuss how U.S. companies can provide guidance and training to
allied nations’ firms on the new export control system.
However, improvements to the export control system cannot be a
government-only responsibility. Industry must share the burden by
training employees and engineers on the new export license reforms
and ensuring their computer systems interact with government networks.
Many details remain to be worked out, but it appears that we are
on the right track. You can e-mail your comments to me at Lskibbie@ndia.org
or to Peter C. Scrivner at Pscrivner@ndia.org.