Export and Reexport International Traffic in Arms Regulations (ITAR) sales Governed by the Arms Export Control Act (22 U.S.C. 2778).

George Mason University International Trade Relations Prof. Stuart Malawer November 28, 2011 A n d r e a L M o o d y N i c o l a s D a v i d P a z m i n o T a r i q M a h m o o d M i a k h e l

http://tcp.unzco.com/book_images/8Cov.jpg

Overview of the Problem



Under the Arms Export control Act (22 U.S.C. 2778), the process of sale to foreign nations and the technology export controls are scattered across three major agencies.



This bureaucratic process hinders the competitiveness of US firms in exporting their defense technology.

http://assets4.parliament.uk/iv/main-large/id_2228.jpg

a)

The Arms Export Control Act (22 U.S.C. 2778) Presidential control of exports and imports of defense articles and services, guidance of policy, etc.; designation of United States Munitions List; issuance of export licenses; negotiations information

b)

Registration and licensing requirements for manufacturers, exporters, or importers of designated defense articles and defense services

c)

Criminal violations; punishment

d)

Enforcement powers of President

http://www4.alibris-static.com/isbn/9786135430448.gif

Problems

http://www.worldpublicopinion.org/pipa/images/apr08/Free_Markets_April08_img.jpg



US firms not free to trade their defense technologies in an efficient manner



The process of approval to export defense technology is an impediment to “partnerships with friends and allies”



Leads to “Erosion of global Market Share for American defense products”

Issues

• • • • • More companies are getting into the business Complexity of rules can cause problems to all businesses Particularly to small and medium sized businesses Obama administration's National Export Initiatives, those initiatives are designed to increase U.S. export business by simplifying export rules “Unnecessary controls a burden” http://www.google.com/imgres?um=1&hl=en&client=firefox-a&sa=N&rls=org.mozilla:en US:official&biw=1280&bih=834&tbm=isch&tbnid=QKFK9PoyeWOIBM:&imgrefurl=http://www.alexmacna

ughton.com/439%3FPHPSESSID%3D8d03d39769418559d7e0047b90adeccf&docid=Y_WKjUWa9tBbMM&i mgurl=http://www.alexmacnaughton.com/images/arms-fair-001.jpg&w=635&h=423&ei=En3KTs ZE8Lq0gGrvO3uDw&zoom=1

http://www.google.com/imgres?start=24&num=10&um=1&hl=en&client=firefox-a&rls=org.mozilla:en US:official&biw=1280&bih=834&tbm=isch&tbnid=W5jptb4JnEaRYM:&imgrefurl=http://sofiaecho.com/2010/07/19/934560_amnesty international-bulgaria-must-tighten-up-arms control&docid=NDOuLuYBhUn4VM&imgurl=http://www.sofiaecho.com/shimg/zx500y290_934569.jpg&w=500&h=290&ei=YX3KTt7fH8r50gHi6r wY&zoom=1 • • • • The export control reform initiative is highly technical Eased controls should allow more outbound trade and thereby expand U.S. Employment U.S. Exporters have long complained of the overly complex and poorly coordinated U.S. Export control system, which is overseen by the departments of commerce, state, treasury, energy and defense Moving items off the restrictive state department-controlled international traffic in arms regulations (itar) list and onto a more lax commerce control list (ccl) controlled by the department of commerce • Collapsing the various export control agencies into a single agency with a single list

Competing Interests

• • • Department of State versus industries and academia Department of State: • • Limited effect Security benefits Industries and academia: • • • • Significant trade barrier Encourages countries to obtain defense equipment elsewhere Stifles trade International students and science http://www.broadbandexpert.com/blog/wp-content/uploads/us-dept-of-state-logo.jpg

http://media.defenseindustrydaily.com/images/AIR_SU_30K_India_Landing_COPE_India_2004_lg.jpg

http://www.tomhcanderson.com/wp-content/uploads/2010/11/textminingacademia.jpg

Harm to US Industries

• • • • • April 2006 – Australian government helicopters Joint Strike Fighter Boeing engineers Brazilian government Restrictions on dual and third country nationals http://rosalienebacchus.files.wordpress.com/2011/09/protests-to-end-corruption-in-brazil-7-september-20111.jpg

ITAR Exemptions

• US Government reluctant to issue broad exemptions • 1963 Defense Development Sharing Agreement with Canada • JSF program with Britain • Defense Trade Cooperation Agreements with Australia and UK http://www.aiac.ca/uploadedImages/Corporate_Membership/AIAC_Members/images/ccc_planes.jp

g

Policy Proposal

• Create a single control list, single licensing agency, unified information, technology system, and enforcement coordination center • Focus ITAR controls on protecting those items that will maintain a military advantage for the United States • Remove a large volume of low level aircraft parts from ITAR control http://www.universetoday.com/wp-content/uploads/2011/11/GPS_Satellite_NASA_art-iif.jpg

• • Licenses Simple, less bureaucratic and les “red tape” • High levels of security in exporting • High investment in border security • Increase diplomatic talks

Impact on U.S. foreign and trade policies

http://hammer.ucla.edu/image/3196/600/450.JPG

• • • Increase in trade, that could lead to increase in the manufacturer sector and return of offshoring companies to the U.S.

Could create diplomatic tensions between the United States and other countries and international and regional organizations Some arguments against it say it could have a negative effect on the country security

http://www.youtube.com/watch?v=gaYqs-PChg4&feature=related

Impact on the private sector

• • • • • Increased opportunity for exporting and re exporting items that are no longer subject to ITAR control More employment opportunities Easier exports Increased manufacturing and export Encourage manufacturing of some civilian products to move back to the United States http://4.bp.blogspot.com/-kDvH-aTTNFQ/ToHCbZE7lmI/AAAAAAAAAa4/KNqaLXqFTbs/s1600/20110805-110533.jpg

Stockholm International Peace Research Institute.

http://filipspagnoli.files.wordpress.com/2008/06/arms-trade-source-controlarmsorg.gif

Bibliography

• • • • • • • • "News Press: Opinion." Our Colorado News: Local Matters. http://www.ourcoloradonews.com/castlerock/opinion/unnecessary-controls-a-burden/article_4aeb27d9-6ab1 51b2-9f49-13b9a8cc7906.html#.TsqBMVZfRA0 (accessed November 21, 2011). :. "Early Steps Toward a Streamlined Export Control System: Proposed Changes to the ITAR and EAR | Sheppard Mullin Richter & Hampton LLP - JDSupra." Legal News, Lawyers, Law Firms | JD Supra - articles, filings, newsletters, legal information. http://www.jdsupra.com/post/documentViewer.aspx?fid=eaead0aa-213b-4ce5-8224 8dc28b8cbadd (accessed November 21, 2011). "AUVAC - Newsitems." AUVAC: Strengthening the AUV Community. http://auvac.org/community information/community-news/view/1284 (accessed November 21, 2011). "Obama rolls out more executive office measures." Vancouver Sun | Latest Breaking News | Business | Sports | Canada Daily News. http://www.vancouversun.com/news/Obama+rolls+more+executive+office+measures/5670054/story.html (accessed November 21, 2011). " USA Moves to Improve Arms Export Regulation Process." Daily defense news for military procurement managers, contractors, policy makers.. http://www.defenseindustrydaily.com/usa-moves-to-reform-arms-export-regulation process-04665/#US-armament-export-reform (accessed November 27, 2011). America, statutes of the United States of, including the Arms Export Control Act, and as amended (22 U.S.C. 2751 et seq.. "Executive Orders." National Archives and Records Administration. http://www.archives.gov/federal register/codification/executive-order/11958.html (accessed November 24, 2011). "U.S. Code." Office of the Law Revision Counsel. http://uscode.house.gov/uscode cgi/fastweb.exe?getdoc+uscview+t21t25+2807+0++%28%29%20%20AND%20%28%2822%20%29%20ADJ%20USC %29%3ACITE%20AND%20%28USC%20w%2F10%20%282778%29%29%3ACITE%20%20%20%20%20%20%20%20% 20 (accessed November 24, 2011). "US State Department - Policy - Directorate of Defense Trade Controls." U.S. State Department - Policy - Directorate of Defense Trade Controls. http://www.pmddtc.state.gov/regulations_laws/aeca.html (accessed November 26, 2011)