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...