U.S. Officials Ask for Industry’s Help in Boosting Arms Exports

Peter Navarro, director of the White House National Trade Council

Photo: Jon Harper

Under pressure from President Donald Trump to increase exports of U.S.-manufactured military equipment, government officials want industry’s input on how to facilitate international arms sales.

Trump on April 19 issued a national security memorandum regarding conventional arms transfer policy. It called for “supporting United States industry with appropriate advocacy and trade promotion activities and by simplifying the United States regulatory environment.” A new, complementary policy aimed at reducing restrictions on the overseas sale of unmanned aerial systems was also put forward.

Government agencies were given 60 days to develop an implementation plan.

During an April 24 event at the U.S. Chamber of Commerce in Washington, D.C., officials discussed the road ahead.

“For too long we made it too hard to provide our allies and partners with the defense capabilities they require and that are in America’s interest,” Peter Navarro, assistant to the president and director of the White House National Trade Council, said during his remarks.

“In the coming weeks, the Departments of State, Defense and Commerce will be reaching out across American industry and civil society during a public comment period to build a deeper understanding of the issues involved and obstacles facing our exporters. Whether there are internal barriers like unnecessary red tape or external barriers such as unfair offset requirements, this administration will be ready to tackle them,” he added.

Navarro noted that strengthening the defense industrial base by boosting exports would serve Trump’s goals of creating manufacturing jobs and reducing the United States’ overall trade deficit.

During a panel discussion, Undersecretary of Defense for Policy John Rood said the health and wellbeing of the industrial base will now be a top consideration when U.S. officials are evaluating potential international military sales. That is “the fundamental change” brought about by the new conventional arms transfer policy, he added.

Tina Kaidanow, acting assistant secretary of state for political-military affairs, noted that the clock is already ticking for officials to create an implementation plan.

“As we develop the plan we want to engage with you and your industry colleagues to get your input,” she said. “Now is really the time … to focus on how we might improve the environment for sales overseas.”

In particular, officials are examining how the U.S. government can improve the way it advocates for American companies in international competition, she said.

“We’re considering how to make our systems more affordable for international customers whether through financing support or other means,” she said. “We’re interested in hearing your suggestions about addressing offset practices that can disadvantage our companies.”

Undersecretary of Defense for Acquisition and Sustainment Ellen Lord said companies can also help by having a better understanding of what technology is exportable and incorporating that into the design of their systems. Many subsystems have sensitive technologies that make them more difficult to sell overseas, she told reporters after the panel discussion.

“The really important thing is if industry can design systems initially to be exportable, that’s great,” she said. “Just like we’re trying to write contracts that have [contract line item numbers] in them that will allow exporting very quickly, if we can design for exportability that will help us all.”

Bolstering key partners and allies is one of the major pillars of the 2018 national defense strategy, and a top priority of Defense Secretary Jim Mattis. In an era of renewed great power competition, arms transfers can play a key role in that effort, Lord said during the panel discussion.

“What differentiates us [from near-peer competitors] moving forward is the fact that when we go to war against China or Russia — if that happens — we have allies and partners that they don’t. So building up that base is very, very important. We want to make sure that we can export our technology, our products so that we are truly interoperable to fight together,” she said.

“I really look forward to using [the new conventional arms transfer policy] moving forward in terms of providing more materials across the world to our allies and partners,” she added.

Kaidanow is bullish about the trajectory of U.S. military exports in the coming years.

In fiscal year 2017 her office authorized, licensed and provided oversight for $42 billion in government-to-government sales and $112 billion in direct commercial sales, she noted. “Those are significant numbers, and I think we’ll see them go up even more significantly in the near future,” she said.

Topics: International, Global Defense Market, Defense Department