Defense Trade: State Department Needs to Conduct Assessments to Identify and Address Inefficiencies and Challenges in the Arms Export Process

The U.S defense industry and some foreign government purchasers have expressed concern that the U.S. export control process is unnecessarily burdensome. Specifically, defense industry officials have stated that extended reviews of export license applications by the State Department are resulting in lost sales and are adversely affecting the nation's defense industry. In the United States, the State Department's Office of Defense Trade Controls is the office responsible for licensing the export and temporary import of defense articles and services. In June 2001, we reported to you that the State Department completed over 46,000 license application reviews in fiscal year 2000. While the U.S. export licensing process can be lengthy because of foreign policy and national security considerations, other factors may also have an impact on processing times. Therefore, you asked us to determine whether elements of the process create delays in license application reviews.

Essential features of the recommendations are to (1) replace licensing of low-risk individual transactions with programmatic approvals; (2) establish timelines for decisions on those items that still require licenses; (3) streamline the munitions list through annual reviews; and (4) harmonize national and multilateral lists to eliminate jurisdictional disputes.

In controlling the transfer of weapons and related technologies overseas, the U.S. gov¿t. must limit the possibility of sensitive items falling into the wrong hands while allowing legitimate trade to occur. The export control system (ECS) is intended to balance multiple U.S. interests. The ECS is managed by the State Dept., which regulates arms exports, and the Commerce Dept., which regulates dual-use exports that have military and civilian applications. Arms exports require licenses, while dual-use exports do not require licenses. This testimony focuses on export licensing inefficiencies, poor interagency coordination, and limits in State¿s and Commerce's ability to provide a sound basis for changes to the system. Illustrations.