Industry Has Key Role in Helping Implement Defense Export Reforms

By Lawrence F. Skibbie

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 or to Peter C. Scrivner at

Topics: Export Control Reform, Regulation, Government Policy

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