Arms export rules relaxed

Introduction

A sweeping overhaul by the Obama administration of U.S. rules for exporting military goods to other countries has begun to take effect, offering buyers of spare parts used in military aircraft the opportunity to bypass a series of longstanding federal export controls.

The overhaul, which will soon be extended to military vehicles, vessels, and submarines, was cheered by the Aerospace Industries Association and other manufacturers groups. The State Department, which promotes U.S. arms exports overseas, said the new rules would “strengthen the U.S. defense and aerospace industrial base” and allow the government to “focus [its] export control resources on the most sensitive items,” according to a news release.

But some independent groups have expressed concern that this unprecedented relaxation of rules — more than four years in the making — could allow terrorists or human rights violators to gain access more easily to militarily useful equipment.

“In my mind, this is a major deregulation,” said Steve Pelak, who until June led all government prosecutions of arms export control violations, at a press conference on Oct. 16. These changes “will make enforcement agencies’ jobs… much more difficult.”

Arms exports are a big business for the United States. In 2011, the U.S. government entered into a record-breaking $66.3 billion worth of agreements to export defense articles and services to foreign governments — nearly 80 percent of such arms agreements worldwide, according to the Congressional Research Service.

This total does not include exports made by private companies to foreign buyers independently of the government, a market that experts say amounts to tens of billions of dollars a year. These are the principal transactions affected by the new rules.

Government officials and industry groups say that loosening controls on less sensitive exports will bring substantial economic benefits. The White House noted in an Oct. 15 statement that foreign countries are increasingly buying basic military parts from vendors outside the country to avoid strict U.S. licensing requirements.

At an April 12 Council of Foreign Relations meeting, Andrew Shapiro, then the assistant secretary of state for political-military affairs, said export reform is “going to have a real impact on our economy at a time when competition is even more fierce and at a time when our manufacturing base could really use a boost.”

The Aerospace Industries Association said in an Oct. 16 news release that it expects the industry’s estimated $21 billion of annual exports of military aircraft and aircraft engine items to increase under the new rules.

However, William Hartung, director of the Arms and Security Project at the Center for International Policy, said in an August report on arms exports that because less than 3 percent of U.S. exports are subject to these particular licensing controls, “it is unreasonable to expect that changes in export procedures governing that small a fraction of U.S. exports are likely to have a major economic impact.”

Even so, the reform effort marks an historic change: Thousands of military-related items once monitored by the State Department’s strict export license control system will move to the Commerce Department’s often less restrictive regulatory process. The Commerce Department’s principal function is to improve the health of U.S. businesses.

The first changes, which cover military aircraft and gas turbine engines, went into effect Oct. 15. They affect spare parts such as helicopter blades, cockpit gauges and steel brake wear pads, but — according to Hartung’s report and William Lowell, former director of the State Department’s Office of Defense Trade Controls — some finished products, such as Black Hawk helicopters, will also shift to Commerce Department control.

The State Department will continue to oversee equipment capable of directly threatening U.S. military forces, such as fully assembled fighter jets and surveillance aircraft.

On Jan. 6, Commerce will take control of most equipment and technology used in military vehicles, vessels and submarines, according to the State Department. The government may also soon give Commerce control over items in other categories of military goods, including firearms, ammunition, and explosives,

Remy Nathan, vice president of international affairs at the Aerospace Industries Association, said the change will prevent the government, U.S. companies and foreign allies from “going through regulations for no relevant national security purpose” on basic items like nuts, bolts and screws.

“I’m perplexed sometimes at those who seem to believe this is some kind of major loosening of the system when I believe it just applies the right level of controls to the appropriate level of technology,” Nathan said.

However, some critics argue that while some military parts may sound harmless, they could still pose a threat if they fell into the wrong hands. Open Society Foundations, an advocacy organization that largely focuses on human rights, hosted a press event Oct. 16 to air their concerns, led by Pelak and Lowell.

Lora Lumpe, a senior policy analyst at the foundations said these spare parts are “not the big money,” but are still “vitally important.” Iran, for example, is persistently trying to obtain spare parts for its aged fighter jets, she said.

Companies, in nearly all cases, must obtain a license for every export of a military item listed on the State Department’s Munitions List. Officials weigh the possibility that the equipment or technology may be misused or fall into the wrong hands. But items moved to Commerce Department control are eligible for more — and broader­ — exemptions from the licensing requirements.

For example, companies may export many types of military equipment and technologies without a license to 36 U.S. allies, including Turkey, Japan and South Korea, if they are used by those governments. Items deemed not “specially designed” for military use would not require a license, though they could not be sent to Cuba, Iran, North Korea, Sudan, Syria and China.

They could be re-exported without approval to all countries except Iran, said Colby Goodman, a former political affairs officer with the U.N. Office of Disarmament Affairs who follows the arms trade. Palek said the “specially designed” phrase leaves much room to interpretation, saying that equipment could be exported without a license if a manufacturer “can think of any civilian application” for the item.

Goodman also noted that the State Department is required by law to scrutinize the human rights records of the countries and individuals that receive any U.S. military equipment. The Obama administration has promised that it will continue that oversight for exports under Commerce Department purview, but the administration is not required to do so by law, a fact that worries human rights advocates, Goodman said.

The White House said in its Oct. 15 statement that it will balance “the easing of export licensing requirements for many items” by offering “increased oversight” by special agents and analysts in the Commerce Department’s export enforcement unit.