On Jan. 22, President George W. Bush issued a directive designed to expedite export licensing of defense equipment, services, and technical data. The directive may ease criticism from industry and Congress that the U.S. export controls system is unnecessarily time consuming, but few specific details about the directive are available.
The full text of the National Security Presidential Directive (NSPD) is not publicly available, but an overview of the directive exists as a one-page fact sheet from the Department of State. It outlines a number of measures to expedite license applications for items on the U.S. Munitions List. According to U.S. law, direct commercial sales of items on that list, whether to foreign governments or companies, must be approved by the U.S. government. This is done through the State Department’s Directorate of Defense Trade Controls (DDTC).
At a meeting Feb. 26, Acting Undersecretary for Arms Control and International Security John Rood estimated that direct commercial sale licenses for defense articles and defense services for permanent export could be valued as high as $96 billion and that 85,000 licenses could be processed in fiscal year 2008, which ends Sept. 30, 2008.
Lawmakers have raised concerns that sales were being unnecessarily delayed. During a July 2007 hearing of the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade, Chairman Brad Sherman (D-Calif.) commented that “[l]ast year, the backlog of unprocessed licenses at DTTC reached 10,000, a number unheard of in prior years.” Sherman singled out a shortage of manpower as one cause. “One aspect of the problem is clear, there is simply not enough personnel to handle the problem,” he said.
A November 2007 Government Accountability Office (GAO) report concurred with Sherman’s assessment by identifying “human capital challenges.” It noted that, between October 2002 and September 2006, the number of case officers remained relatively constant (35) but the number of cases processed rose by 20 percent and median processing time doubled.
The directive appears designed to address some of these concerns by mandating the commitment of additional funding to expedite license processing. At the February meeting, Rood underscored the pending creation of a self-financing mechanism for the DDTC that could provide as much as 75 percent of the funding for the directorate. At the same meeting, Frank Ruggiero, deputy assistant secretary for defense trade and regional security, stated that achieving the directive’s goals would “most certainly require additional hires.” Exact details about these changes are not yet available, but Rood expects to submit a financial and personnel resources plan to the Office of Management and Budget by March 22.
The directive appears to address other suggestions from the GAO, a congressional watchdog agency. The GAO had faulted the DDTC’s electronic filing and processing system, D-Trade, saying that it had not significantly improved processing times and that it lacked tools to aid officers. The recent presidential directive states that the “electronic licensing system,” presumably including D-Trade, will be upgraded so that all agencies can access the same data. A plan for electronic interoperability is due by July 22, according to Rood.
The State Department also accepted the GAO’s recommendation to conduct systematic assessments to “identify and address inefficiences and challenges in the arms export process.” Rood said that data is now reviewed weekly and key metrics are improving “substantially.” He reported that the number of cases kept open more than 60 days is reduced to 20, down from 400, and the total number of open cases currently stands at 3,400, down from 7,500 in April 2007 as noted by the GAO.
The presidential directive also calls for a number of procedural changes. It says that guidelines would be issued that require a decision on license applications within 60 days, barring some exceptions. It mentions that a multiagency working group will be established to address enforcement investigations.
It also indicates that an interagency dispute mechanism will be created to resolve jurisdictional issues between the Departments of State and Commerce. That mechanism is to be established by March 1 and will be chaired by Ruggiero, according to Rood.
The Commerce Department maintains the Commerce Control List, which governs exports of goods, technology, and information that have both military and civilian uses. At times, there are disputes as to whether an item should be considered a defense item and controlled by the State Department or a dual-use good controlled by the Commerce Department. These jurisdictional questions can delay license processing.
In a separate NSPD issued Jan. 22, the president dealt with dual-use goods. The publicly available two-page fact sheet of that directive calls for a greater differentiation among foreign end-users. It was hailed by the National Association of Manufacturers (NAM) which, in partnership with the Coalition for Security and Competitiveness, sent 19 recommendations for export reform to the president in 2007. According to a side-by-side comparison released by NAM, the president’s directive could support at least 16 of the recommendations, including license exceptions for the transfer of controlled items within companies and favorable treatment for foreign end-users with strong compliance programs.
To date, however, the full directives have not been released and many of the implementation details are still pending, making it difficult to determine exactly what they include and whether they will be sufficiently strong to protect against possible diversion of defense items and technology. Similar concerns have been raised in relation to separate defense trade cooperation treaties with Australia and the United Kingdom that the Bush administration submitted to the Senate last year. Those treaties would create licensing exemptions for a community of preapproved defense firms. (See ACT, September and October 2007.)
On Feb. 14, U.S. and British officials signed an implementing agreement and made it publicly available. A number of key lists, however, remain unpublished, including approved operations, programs, and projects as well as those defense articles that would be exempt from the treaty.
The Senate was not expected to act on the treaties until the implementing agreements were shared. On Feb. 21, a Senate Foreign Relations Committee aide told Arms Control Today that the committee needs to study the arrangement with the United Kingdom and is still waiting for implementation details of the proposed treaty with Australia. The committee has yet to express any views on the subject.