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Published on March 1st, 2017 | by Guest

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Commerce Department Boosts Arms Sales Deliveries to Record High

by Colby Goodman

U.S. arms sales deliveries jumped to more than $25 billion in FY 2015, increasing the total value of U.S. arms deliveries by at least $5 billion over recent years, according to latest data from several U.S. government reports. The major increase in U.S. arms sales deliveries comes from a relatively new Commerce Department program established in part to help U.S. companies export certain types of military equipment more easily. Some arms industry associations are already urging the Trump administration to further reduce controls on defense companies exporting arms, but it’s too early to tell what specific controls the administration would seek to reduce.

The new program was created as part of the Obama administration’s hardly noticed overhaul of U.S. arms export control regulations called the Export Control Reform Initiative. Based on a White House determination that the U.S. export system was undermining the competitiveness of defense industries key to U.S. national security with an overcomplicated structure that tries to control too much, the administration started to reduce controls on arms of “lesser military significance” to the United States in January 2014. By the end of FY 2015, the administration had moved oversight of tens of thousands of arms from the State Department’s more strictly controlled Direct Commercial Sales program to the Commerce Department’s more loosely controlled 600 Series program.

The changes already appear to have ushered in significant increases in U.S. commercial arms deliveries. The total value for all commercial arms sales deliveries in FY 2015 was $9.3 billion, with the 600 Series program accounting for $4.5 billion and Direct Commercial Sales program accounting for $4.8 billion. The total value of commercial arms sales deliveries was $5.2 billion in FY 2013 and $3.8 billion in FY 2012 when the State Department’s program was operating as the only commercial arms sales program. The U.S. government also delivered $16.7 billion worth of arms abroad in FY 2015 through the government-to-government arms sales program called Foreign Military Sales.

The major jump in U.S. commercial arms sales deliveries from FY 2014 to FY 2015 comes in part from noticeable increases to the Asian countries of Australia, Japan, Singapore, South Korea, and Taiwan. In FY 2014, for instance, U.S. companies delivered $8.8 million worth of arms to Taiwan through the Direct Commercial Sales program. In calendar year 2015, U.S. companies delivered a total of $127 million in arms to the country through the 600 Series program, according to data released by the Commerce Department. U.S. companies also delivered relatively high-dollar amounts of arms through the 600 Series program to Germany, Israel, Iraq, Mexico, Saudi Arabia, Spain, the United Kingdom, and the United Arab Emirates in 2015.

Among the 125 countries that received military equipment through the 600 Series program, the most popular military categories were military aircraft, military gas turbine engines, military electronics, and ground vehicles. Although the bulk of the arms delivered under the military aircraft category are likely parts and components for a range of military aircraft such as the F-16, U.S. companies can export fully assembled unarmed military cargo and observation aircraft as well as military helicopters that the State Department once considered “significant military equipment.” The Obama administration has kept closely guarded U.S. military technology and firearms, artillery, and ammunition under the State Department’s control.

One reason that U.S. companies may be increasingly using the 600 Series program is that they can export their products more quickly and with fewer controls. Companies are able to export most of the arms under Commerce Department control to 36 countries closely allied to the United States, including Turkey, without U.S. pre-approval through the Strategic Trade Authorization (STA) license exemption. They may also use eight other license exemptions or several license-free options to export without U.S. pre-approval. Based on Commerce Department data, U.S. companies exported about $1.5 billion worth of arms in calendar year 2015 using one of these license exemptions available to them under the 600 Series program. Some U.S. companies are also pleased that they no longer have to be concerned about controls related defense services, broker licenses, registration, and registration fees.

Companies can also more easily export certain types of military equipment to countries such as China and Venezuela that the State Department’s Direct Commercial Sales program often excluded from receiving arms. In 2015, for instance, U.S. companies exported $267,053 worth of military aircraft, military electronics, and ground vehicles to China. Since FY 2010, U.S. companies only exported $17,700 worth of commercial arms sales to China using a presidential waiver. U.S. companies also exported $458,654 worth of military electronics to Venezuela in 2015, but the country hasn’t received U.S. arms deliveries since FY 2009 through the other well-established U.S. arms sales programs.

Given the extensive loosening of U.S. arms export controls under the Obama administration, it’s somewhat surprising that defense industry associations are already asking for more reductions in U.S. arms export controls. Representatives of the Aerospace Industries Association told Defense News that they hope that the Trump administration continues to ease exports of military aircraft items, including potentially creating license exemptions for companies exporting and importing items associated with F-35 fighter jets under State Department control. Defense industry representatives have also raised concerns about U.S. government delays in approving certain arms exports. In a prominent firearms industry magazine, industry experts also indicated that moving U.S. government oversight of firearms exports from the State Department to the Commerce Department is “ very doable” under the Trump administration.

In support of reducing regulations, President Trump issued an executive order calling for the elimination of two U.S. regulations for every one regulation created. In early February, the Trump administration also reportedly sought to remove Obama administration holds on U.S. exports precision-guided missiles to Saudi Arabia and F-16s to Bahrain over human rights concerns. U.S. arms export compliance attorneys have also noted that Trump will likely honor Obama administration’s reduced sanctions on Iran and Sudan.

Although the above actions make it possible that his administration will push for further arms export control reductions, it’s hard to know what kinds of reduced controls the administration would support without key leadership positions filled within State and Commerce. Within the Commerce Department, it will be important to see who fills the post of assistant secretary for export administration. Given the amount of commercial arms exports going through the Commerce Department with less oversight, it will also be critical to monitor arms sales and enforcement actions through this new program to ensure that they match U.S. foreign policy interests.

Colby Goodman is the director of the Security Assistance Monitor at the Center for International Policy where he leads research and analysis on U.S. foreign security assistance around the world. 

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