PRESIDENT'S PERSPECTIVE GLOBAL DEFENSE MARKET
Foreign Military Sales More Vital Than Ever
Senior Fellow in Residence Tom Davis, along with Remy Nathan, vice president of international affairs at the Aerospace Industries Association, appeared before the subcommittee to provide some observations.
As Rep. Vicky Hartzler, R-Mo., chair of the subcommittee said in her opening statement, “It is vital to provide the opportunity for our allies to acquire military equipment and services to bolster their security needs. It’s also important to note the benefits the United States realizes from our allies’ collective safety, especially as threats to democracy and freedom expand.”
As many have observed, the process by which FMS and commercial direct sales of military equipment to international customers are reviewed and approved by the U.S. government has grown complex and cumbersome. In the government itself, there are numerous stakeholders involved in the process including Congress and the Departments of Defense, State and Commerce. Defense and State essentially review items from the perspective of defense capability and strategy, and how a sale would further U.S. interests. Commerce reviews sales from the perspective of the transfer of technology that might have a dual-use capability, essentially a commercial item that could have military applications.
As Hartzler noted, “Some believe the Department of Defense’s FMS process is too cumbersome and bureaucratic. Others offer that the process is designed to be deliberately slow and methodical in order to achieve the correct outcome in determining whether or not the U.S. supplies military capabilities that appropriately further U.S. national security interests.”
For a company seeking to make an international sale, navigating through this thick undergrowth of rules, regulations and players can potentially take two to three years as the sale is reviewed from numerous perspectives. Not surprisingly, the various review organizations can have very different views on the appropriateness and merits of a potential sale, and although one agency may be signaling to the provider that the sale will be approved, another agency may simultaneously be preparing the case against it, which is sometimes unknown to either the other agency or the company.
Various efforts have been undertaken to make U.S. international sales simpler. Some, including the review of the restrictive Munitions List, have been useful. However, many have reported that the movement of items from the State Department controlled Munitions List to the Department of Commerce controlled Commerce Controlled List has resulted in an increase in the number of controlled items, with some being described in such detail that it is often unclear if a particular product is covered or not.
One effort underway that holds much promise is the Defense Exportability Features Pilot program intended to incorporate technology protection features into items that have a high-probability of appeal in the international market. This pilot was approved in the fiscal year 2011 National Defense Authorization Act, and the Defense Department’s undersecretary for acquisition, technology and logistics now has identified 15 programs to participate in it. But the effectiveness of this effort is still to be determined given its “pilot” status.
There are many reasons why this is an important issue deserving of review and procedural restructure. In economic terms, U.S. aerospace and defense sales abroad represent the nation’s third largest gross export earner. In short, such items account for considerable foreign earnings, which helps mitigate the trade imbalance that has grown over the years. Efforts that make international sales easier will, therefore, have a most positive effect in economic terms.
Also, from a military perspective U.S. forces are better positioned to operate with other nations in alliances or coalitions when their equipment is interoperable. If partners use American-produced equipment, particularly aircraft and major ground systems, operational compatibility is assured. In certain regions, the United States must be conscious of the local balance of power, and in many cases it will want to be sensitive to providing equipment having the most up-to-date capabilities equal to what it provides its own forces. Having partners who can magnify U.S. capabilities will always be militarily desirable.
Finally, alliance and coalition partners that use major U.S.-made items will inevitably develop closer relations with the American military, its industry, and through them with the American people. The connection enhances both military and personal relationships having secondary — and often tertiary — effects that are positive. And the industrial connection, providing long-term product sustainment has much the same result. In other words, U.S. military equipment sales overseas are like a pebble tossed into a pond: the splash is less important than the wider ripples that emanate from it.
At the hearing, Rep. Martha McSally, R-Ariz., a retired Air Force officer and former fighter pilot, stated that she viewed international sales as a key element of American “soft power.” In that regard, I could not agree with her more. But as Davis pointed out, if the United States does not have a process that can quickly meet the often near-term needs of foreign customers, someone else — having a much shorter approval cycle and interests possibly at odds with ours — will step in and meet the need.
International sales of military items are clearly in the national interest, and as the world becomes more complex and volatile, this dimension of U.S. foreign policy will become increasingly important.
In addition — but of secondary concern overall — as domestic budget cuts have reduced U.S. defense modernization efforts, international sales have become relatively more important to the major players of the defense industrial base. Any way one looks at it, this is an area of great importance.