When the leaders of the global aerospace industry met late last month at the 50th anniversary staging of the Paris Air Show, one word predominated: exports. With military budgets leveling off or declining in the United States and Europe, arms companies are looking to deals in the Middle East and Asia to bolster their bottom lines.
Nowhere has this strategy been more successful than in the United States, where an export-friendly Obama administration has presided over the largest arms-export boom in history. In 2011, the most recent year for which full statistics are available, the United States entered into arms sales agreements worth over $66 billion -- an astounding 78 percent of the world market.
The current U.S. dominance of the trade will not go unchallenged. For example, as purchasing nations clamor for their own drones, China and other suppliers are seeking to develop cheaper alternatives to U.S. models. Last month, three European arms firms urged their governments to invest in a "Euro-drone" that would supplant systems currently being imported from the United States.
But the Obama administration will not yield market share without a fight. At a congressional hearing in April, Tom Kelly of the State Department's Bureau of Political-Military Affairs noted that the Obama administration was doing everything in its power to promote U.S. arms exports:
It is an issue that has the attention of every top-level official who is working on foreign policy throughout the government including the top officials at the State Department ... in advocating on behalf of our companies and doing everything we can to make these sales go through ... and that is something we're doing every day, basically [on] every continent in the world.
The pointy end of that spear is the administration's ongoing effort to dramatically overhaul (read: relax) the nation's export-control system. The current approach, while far from perfect, involves scrutinizing all significant transfers of arms or arms technology to assess their potential impacts on human rights and nuclear proliferation, as well as the risk of weapons-related items reaching terrorist groups. Sales that raise red flags in any of these areas are supposed to be denied an export license. In addition, sales of major items like combat aircraft, armored vehicles, or air-to-air missiles are reported to Congress, which is empowered to weigh in against questionable deals. The lead agency for these activities is the State Department.
The Obama administration's proposed reforms threaten to undermine this system of controls and increase the risks of weapons technology falling into the wrong hands. This is far too high a price to pay for any increases in efficiency or economic benefits that may result from an easing of controls.
It's not as if the current export control system is particularly onerous. The State Department processes around 7,200 export licenses per month, with an average wait of about 18 days. The value of licenses approved has more than doubled since 2006, a further indication that legitimate exports are moving through the system at a healthy pace.
Despite its significant risks and limited potential benefits, the Obama administration has made easing export controls a central policy goal. The administration first announced its intention to radically change the way the U.S. government vets potential arms sales in August 2009, when it unveiled an approach dubbed the Export Control Reform Initiative (ECRI). The initiative was music to the ears of the arms industry, which has spent nearly two decades pressing for many of the changes it suggests.
At first glance, the ECRI appears to be a commonsense effort to clean up the export control process by reducing scrutiny on thousands of smaller items, mostly weapons components, thereby freeing up resources to focus on equipment that would be more likely to undercut U.S. military superiority or undermine its policies if transferred into the wrong hands. Administration officials have described this approach as establishing "higher fences around fewer items."
To critique the current export control system, the administration's example of choice has been its assertion that a bolt for an F-18 fighter plane receives the same level of scrutiny as the aircraft itself. But Will Lowell, the former head of the State Department's Office of Defense Trade Controls, has pointed out that this is not the case. Shipments of components that cost less than $500 -- like bolts -- are exempt from extensive vetting, and the administration can increase this cutoff price without a change in law. In other words, if over-regulation of relatively inconsequential parts is the main issue, the administration can address the problem directly without overhauling the entire arms export control system. Furthermore, the suggestion that the ECRI is mostly about spare parts is belied by the fact that the initiative would also eliminate controls on major items like older-model C-130 transport planes, Black Hawk and Huey helicopters, and engines for C-17 aircraft.