The U.S. government is revamping its export control regime for military-related products, a systemic reform long sought by the nation’s aerospace industry. The reform could facilitate prospective deals being pursued by U.S. companies here in the Asia Pacific region and other parts of the world.
The issue of military exports pits advocates of weapons nonproliferation against those who argue that the U.S. must remain economically competitive with other nations. But there is wide acknowledgment that the existing system of vetting products and technologies for export is deficient.
The current system is rooted in Cold War rivalries and has operated from two different lists of products subject to licensing: the Commerce Control List administered by the Department of Commerce and the U.S. Munitions List maintained by the State Department. Shipment of military goods is subject to licensing jurisdiction of State’s Directorate of Defense Trade Controls. Commerce’s Bureau of Industry and Security regulates the export of commercial products, including “dual use” items with both commercial and military applications. The Office of Foreign Assets Control within the Treasury Department enforces trade sanctions against targeted foreign countries.
U.S. aerospace executives argue that strict export controls limited the growth of the nation’s satellite industry in the late 1990s, when satellite technology was subjected to International Traffic in Arms Regulations (ITAR) requiring companies to obtain a State Department license before selling products overseas. Now there is concern over unmanned aircraft systems (UAS)–a market in which the U.S. currently holds a commanding lead. In a keynote address at the Unmanned Systems North America conference in Washington, D.C., last year, Northrop Grumman CEO Wes Bush cited India’s development of an armed variant of its Rustom UAS.
“Today’s export restrictions are hurting this industry and the U.S. without making us any safer, and they could cause the U.S. to relinquish to other nations its lead in these technologies,” Bush warned. “Today, the U.S. is struggling to sell unmanned aircraft to our allies, while other nations prepare to jump into the marketplace with both feet. In a repeat of the satellite example, the thinking seems to be that our allies will neither build their own, nor buy them from those who will be motivated by the perversity of our policies to build them themselves.”
In his first state of the union address to the U.S. Congress in January 2010, President Barack Obama unveiled a new National Export Initiative with the goal of doubling U.S. exports in five years. In a speech in April that year, former Defense Secretary Robert Gates outlined the administration’s approach to reforming the export-control regime by creating a unified list of controlled products and a single licensing agency for both dual-use and munitions exports. Gates called for the removal of licensing requirements for thousands of export applications for European Union and NATO countries, advocating a system in which “higher walls are placed around fewer, more critical items.”
The Pentagon is taking the lead in drafting a “positive” U.S. Munitions List based on objective criteria. Defense products not identified in the munitions list would move to the Commerce Control List.
Last July, the Commerce Department issued a proposed rule for industry comment that would create a framework for controlling “militarily less significant defense articles, largely generic parts and components” via the Commerce Control List. The Aerospace Industries Association (AIA), representing U.S. aerospace and defense companies, applauded the rule, saying that technologies deemed to have little or no military value should be removed from the U.S. Munitions List. Exports of these technologies to military allies may be eligible for more flexible Commerce license exemptions, and items not “specially designed” for the military will be subject to the same export-control requirements as their commercial equivalents, AIA said.
An example of progress in export control is the U.S. collaboration with Germany on common uses of the Global Hawk UAS. In July 2011, Northrop Grumman flew the Euro Hawk signals-intelligence version to Manching, Germany, for development and testing leading to joint testing with the German air force. Northrop Grumman is partnered with EADS Cassidian Air Systems, which is providing its integrated signals intelligence system for the aircraft.