U.S Defense Industry: The Overwhelming Importance of the Export Regime
Since its inception in 1919 the American Defense industry has been one of the key industries of the United States where stringent regulations have been in place given the critical nature of the industry for the national security. The single most important issue for the industry is the issue of export control regime since it is intricately connected with the transfer of dual use items and transfer of cutting edge sensitive technologies to the third parties that might jeopardize the national security.
Arms Export Control Act
The Arms Export Control Act was promulgated in 1976. It equipped the President with wide ranging powers over the export of defense related items and services. The legislation reflects the United States' sensitivities related with the national defense in which the defense related export items should not contribute to an arms race, lead to the proliferation of the weapons of mass destruction, trigger a military conflict and support international terrorism.
International Traffic in Arms Regulation
Especially important in this context is the International Traffic in Arms regulations which does not only regulate the export of the defense items from the United States but also regulates the re-export of the defense equipments by third countries which were originally produced in the United States. International Traffic in Arms regulation lists number of goods, software and data to be subjected to such controls under the United States Munitions List. In addition to the items enumerated in the list, the regulations also monitor the items that do not have a "predominantly civil application" and specifically designed and developed for military purposes. International Traffic in Arms regulation requires the exporters of the defense items to obtain licenses prior to their exports from the State Department's Directorate of Defense Trade and Controls. Moreover the regulation has also enumerates some countries that the export of defense related items are prohibited.
The New Impetus for Reform
The strict rules and regulations imposed by International Traffic in Arms has increasingly been criticized in the United States. Especially the dispute with Britain over the F 35 program due to the stringent regulations that the International Traffic in Arms imposed had led to serious criticism of the regulation that dubbed the mentality behind the U.S Defense Export Control regime as not protection but protectionism. The main problem for the firms operating in the industry is the obstacles standing in the way for multilateral cooperation between countries. Since the industry is based on serious and long term R&D with huge budgets, the need for multilateral cooperation to produce the cutting edge defense technologies is increasing. The leading figures in the industry usually complain about the slow pace of legislative changes that fail to catch up with the fast pace of change in the industry. The exports of defense related and dual use items are administered by the United States Departments of State and Commerce. However in some cases the necessary permits to be issued by these two departments may take months which means delays for the industry.
The export control regime in United States defense industry has a critical value both for the U.S defense industry and for the third parties involved. The export regime in defense items are subject to the controls by the State Department as well as the Department of Commerce and regulated by the Arms Export Act and the International Traffic in Arms Regulation. Both of these two regulations have been specifically designed to prevent the transfer of vital cutting edge technologies and the dual use items in to the hands of the third parties which can pose a threat to the national security of the United States. However it has been a long time since those regulations have been enacted and these two bodies entrusted with the overseeing of the export regime and the accelerating speed of changes taking place in the defense industry necessitate a response on the part of the law makers to ensure the smooth functioning of such a critical industry that has a vital importance for the national security. Hence it is better for the law makers to be sensitive and respond to the demands of the industry representative and try to initiate reforms which will attune the existing laws and regulations with the latest developments in the industry.