Export Controls: a Contentious Issue Reaching a ‘Boiling Point’

Stringent U.S. controls on exports of military technology may help keep advanced weapons out of enemy hands, but they also are making it tougher for the United States to get the best available weapons for its armed forces, say government and industry experts.

The Bush administration in recent years has tightened restrictions on sales of U.S. technology to foreign buyers. At the same time, it has heeded industry complaints about the burdensome process of obtaining export licenses by adding more staff to the State and Defense Department offices in charge of handling the applications.

None of these changes, however, acknowledges the realities of the world today — where technology flows freely across national borders and the United States depends on foreign technology to secure its military edge, says a new study by the Center for Strategic and International Studies. The report, titled, “Toward a U.S. Export Control and Technology Transfer System for the 21st Century,” argues that U.S. policies fail to recognize the power of globalization and the declining competitiveness of U.S. industry.

Defense industry analyst Pierre Chao, who chaired the study, says the issue of export control reforms has reached a “boiling point,” with frustrations running high on both sides of the debate.

Back in the 1990s, a push for export control reforms was based on economic arguments — U.S. industry depends on foreign sales for its profitability — but that rationale no longer became acceptable after 9/11. “We have found very little sympathy for pure economic arguments about this topic and much more resonance with the national security implications,” says Chao in a presentation to a CSIS conference.

The latest wave of calls for reform presents a broader rationale that is based both on economic and national security needs. “At last count, there was something on the order of 18 export control reform studies, efforts, commissions underway,” he says.

Restrictive policies are impeding the flow of key technologies that the U.S. military needs, Chao says. “While we sit here and try to prevent technologies from going out, I think we have got to be very careful that you don’t prevent the raw technologies from coming in.”

He notes that many of the greatest achievements in U.S. weaponry were made possible by foreign technologies, “whether that is nuclear weapons thanks to German Jewish scientists, whether it is space, thanks to German scientists … whether it is armored vehicles, a British invention, or airpower, also a British invention,” he says. “Stealth technology was actually a Russian algorithm that Northrop Grumman scientists happened to see at a conference that told them how to calculate the bouncing of radar waves.”

The current export control regime also is hurting U.S. military ties with key allies that are finding it increasingly difficult to acquire U.S. technology, says Chao. “What you find is that the friction that the whole system causes in terms of international cooperation and cooperation with our allies is popping up very large.”

Close allies such as the United States, the United Kingdom and Australia ought to be able to form “trusted communities” where technologies can be shared with fewer restrictions than would be the case with other countries, the CSIS study proposes. Another example would be an “F-16 ownership community” that would include countries that own the U.S.-made jet fighter. “If I’m already licensing and approving those parts to each country individually, you could make that a trusted community that allows the flow of those parts in and amongst themselves regardless,” says Chao.

Mario Mancuso, head of the bureau of industry and security at the Department of Commerce, says that many of the recent efforts to reform export control policies miss the bigger picture.

The State Department regulates arms exports and the Commerce Department regulates dual-use exports that have military and civilian applications.

“We need to build in our departments and agencies deeper reservoirs of institutional understanding of how our world has changed since the end of the Cold War — and how it is changing still,” Mancuso says at the conference. “Globalization, generally, has increased the pool of world-class competitors and altered the dynamics of global economic competition,” he says. “Technology, talent and capital are now ubiquitous, and the U.S. must now compete economically and technologically with the rest of the world, including not only Europe and Japan, but also China and India, as well as Brazil, Korea, Indonesia — and the list goes on.”

By 2010, if current trends continue, more than 90 percent of all scientists and engineers will be living in Asia, says Mancuso. “Today, a third of the world’s R&D staff are already located in India and China,” he says. “The very alchemy of our military’s technological superiority has also changed. In the past, approximately two-thirds of our nation’s military technologies were developed in a defense R&D setting, with the remaining third coming from adaptations of commercial, off-the-shelf technologies. Today, those proportions have been almost exactly reversed.”

These changes challenge one of the core assumptions of U.S. export controls — that “we have something that others do not,” he says. “In this environment … we can no longer rely exclusively on export controls to maintain our strategic technology leadership. We need to complement smart and effective export controls with an affirmative strategy to ‘outdistance’ our competitors, to remain the most innovative and competitive economy in the world.”

At the Defense Department, which supported the CSIS study, there are frequent discussions about the merits and drawbacks of export controls.

“There is no silver bullet answer,” says Deputy Defense Secretary Gordon England. “We tend to think about restricting goods and services but we should also think about encouraging exports,” he says. “Rivers of technology flow across the globe … Much is outside the control of the U.S. government.”

“A lot of the controls we exercise in Washington are tantamount to damming up the Potomac while all the other rivers flow freely,” England says. “We feel that if we dam up the Potomac the oceans won’t rise … We restrict H1B visas for technical employees. We limit the innovation of U.S. companies. It’s a national security issue,” England says. “If we are trying to achieve security with controls, we should think of it as a temporary fix. Key is to invest in R&D, healthy industry, workforce. That’s the only way you can ultimately succeed at this.”

Supporters of tighter export controls obviously disagree.

“We have threats that can only be met through export controls,” says John Negroponte, U.S. deputy secretary of state. “It’s keeping technology from our adversaries.”

Negroponte also notes that countries such as China devote resources to acquire sensitive U.S. military technology. Other new threats include terrorist groups, gangs and drug traffickers, says Negroponte. “In this environment it is more complicated to administer export controls, but it’s more important … Large scale development is no longer a one country effort,” he says. A case in point is the Joint Strike Fighter, with hundreds of contractors across many borders.

The Government Accountability Office blames both State and Commerce for not adequately protecting sensitive technologies.

“In controlling the transfer of weapons and related technologies overseas, the U.S. government must limit the possibility of sensitive items falling into the wrong hands while allowing legitimate trade to occur,” says an April 2008 GAO report. “Achieving this balance has become more challenging due to redefined security threats and a globalized economy.”

“Poor coordination among State, Commerce, and the other departments involved in the export control system has created vulnerabilities,” the report says. “In one case, Commerce determined that an item was subject to its less restrictive export requirements when, in fact, it was State-controlled.” Such confusion increases the risk that sensitive items, such as missile-related technologies, will be exported without the appropriate review, says GAO.

Earlier this year, the White House announced that the president signed directives that were intended to ensure that the export control system focuses on meeting security and economic challenges.

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Topics: Defense Department, DOD Policy, International