Bush Team Reviewing Defense Trade Policy
by Dennis Kennelly and Ben Stone
The Bush administration in 2002 began a comprehensive assessment of the effectiveness
of U.S. defense trade policies in an effort to identify changes needed to protect
the country’s national-security and foreign-policy interests.
This assessment, National Security Policy Directive 19—a classified presidential
order directing the review—is scheduled to be finished in May.
The review’s objectives, according to an unclassified public announcement
released late last year by the White House, are to ensure that defense trade,
technology security and acquisitions policies:
- Support the security of the United States.
- Contribute to peace and stability, including regional security.
- Support U.S. nonproliferation and counter-terrorism policies and strategies
and international commitments.
- Control critical military technologies.
- Protect such technologies from diversion.
This is not the first attempt to revise U.S. export-control regimes. More than
a decade ago, the previous Bush administration initiated a review of the U.S.
Munitions List, which was completed during the Clinton administration. At best,
this review resulted in token, minor reductions in the list.
In 2000, the United States announced the Defense Trade Security Initiative,
which was the first major post-Cold War attempt to revise the U.S. export-control
system. This system is a series of safeguards designed to prevent the inappropriate
export of sensitive military technology by requiring a license for the export
of certain munitions and defense services. The Departments of Defense and State
are responsible for determining what can and cannot be exported.
Although welcomed by industry and supported by the Pentagon, the expected efficiencies
from DTSI have not materialized. It is widely believed that the reason DTSI
has not worked is because it made only procedural modifications to an already
complex export system, as opposed to what is really needed to break with the
old Cold War thinking—a complete paradigm revision.
Unlike the DTSI, the NSPD-19 is a complete review of export procedures. It
will encompass all aspects of the U.S. defense trade and identify foreign market
access barriers that impede U.S.-Allied defense industrial cooperation.
The review aims to maintain America’s industrial, technological and war-fighting
advantages over its potential adversaries, while suggesting methods to facilitate
friends’ and allies’ efforts to increase capability and interoperability
for more effective coalitions.
For instance, discussions will include the top U.S. weapons-acquisition programs,
for which increased industrial participation or greater access to U.S. technology
by allies—and vice versa—would improve military effectiveness of
U.S. coalitions. Also included are ways to facilitate fundamental research,
exploitation of commercial developments, increase allied defense spending and
burden sharing. The review is meant to determine the effectiveness of current
policies and procedures such as DTSI and develop recommendations for continuing,
changing or discontinuing the initiative, as well as consider additional initiatives
as appropriate. However, all proposed modifications will be assessed against
the potential risks to U.S. national security and foreign policy interests.
The Departments of Commerce, Defense, State and other federal agencies have
been tasked with conducting the review. Several defense-related agencies are
soliciting the U.S. defense industry for comments. Working through organizations
such as NDIA, Defense Trade Advisory Group, Aerospace Industries Association
and the Center for Strategic and International Studies, industry has met to
discuss all aspects of defense trade issues, from foreign military financing
to export controls. The result has been constructive recommendations on possible
improvements in the programs, as well as legislative proposals to implement
NDIA strongly supports the NSPD-19 review. Today’s defense trade policies
and regulations do not reflect current realities-on the one hand, the cooperation
and collaboration required for the U.S. defense industry to supply best value
for U.S. programs and, on the other, the growing effect of the globalization
of the defense market.
From an industry perspective, the current U.S. defense trade regulations are
complex and restrictive, seriously inhibiting cooperation with this nation’s
closest allies. Moreover, industry believes the current export-control system,
on balance, may do more unintended damage to U.S. national security policy than
it does good.
Major weapons-systems acquisition programs, such as the Joint Strike Fighter-a
centerpiece of the current administration’s transatlantic cooperative
efforts—are predicated on increased U.S. and foreign industrial collaboration,
requiring greater technology exchanges. The definition of “U.S. industry”
has changed through foreign and U.S. acquisitions and mergers of U.S. defense
companies, such as BAE SYSTEMS, and joint ventures, such as Raytheon/Thales.
Current defense trade laws and policies must be revised to balance rational
national security concerns and strategies with the need to enhance both the
international competitiveness of the U.S. defense industry and the military
effectiveness of U.S.-led international coalitions. The NSPD-19 review can be
the catalyst to identification of the foreign market access barriers that impede
U.S.-allied bilateral defense-industrial cooperation.
NDIA’s International Division is working with other associations to ensure
that the U.S. defense industry participates in this process. In the next issue
of National Defense, we will offer some specific suggestions for the next step
in the NSPD-19 Review.
Dennis Kennelly is vice chairman of NDIA’s International Division and
senior manager of the Washington, D.C., office for MBDA, Inc. Candace Miller,
director of International Trade Compliance of BAE Systems and a board member
of NDIA’s International Division, also contributed to this article. For
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