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WebMemo #3029 on National Security and Defense and Trade

September 28, 2010

Senate Action on U.S.–U.K. Defense Trade Cooperation Treaty Represents Important Progress

By

On Tuesday, September 21, the Senate Foreign Relations Committee reported favorably on the U.S.–U.K. Defense Trade Cooperation Treaty, the U.S.–Australia Defense Trade Cooperation Treaty, and a bill that would implement both of these treaties. On Monday, September 27, the Senate, by unanimous consent, approved this implementing legislation.

These are important steps forward in the bipartisan effort to secure the ratification and effective implementation of these treaties. Congress and the Administration should continue to act responsibly to secure the benefits that these treaties will bring to the U.S. and its close allies.

The Problem the Treaties Address

The treaties permit the U.S. to trade many defense articles with Britain and Australia without an export license. The U.S. ultimately refuses very few export licenses for defense trade with either nation. For example, over 99.9 percent of requests for defense exports to the U.K. in a typical year are approved. The treaties, though an administrative innovation, will not open formerly restricted trade. Rather, they will reduce bureaucratic burdens on a well-established trade and thereby encourage it to grow to the benefit of all concerned.[1]

Neither the U.S.–U.K. treaty nor the U.S.–Australia treaty decontrol defense-related trade or create a free trade area for defense. Under the treaties, the U.S. has negotiated with the British and Australian governments approved lists of private sector defense and counterterrorism-related entities in these countries that are allowed end-user access to U.S. items. Both the U.K. and Australia will protect U.S.-origin items as classified and will require prior U.S. approval for the re-export of these items. The U.S. has also excluded certain particularly sensitive items from eligibility under the treaties.

Because the treaties will spur international collaboration, competition, and innovation, it is impossible to predict which firms will benefit from them. Even if most existing firms do not take advantage of the treaties, the treaties will create opportunities that new firms may find attractive: The defense market, like all markets, is not static. The treaties will provide an additional avenue for the innovation that the U.S. military in particular relies on to retain its edge. As defense budgets are under pressure in both the U.S. and Britain and the efficiency of defense procurement is at issue, the opportunities offered by the treaties are particularly important.

A Roadblock to Ratification Has Been Removed

The principle behind the treaties has widespread support. The Bush Administration deserves credit for negotiating the treaties, as does the Obama Administration for backing them. But for too long, neither Administration was willing to address the concerns that delayed ratification by the Senate.

These concerns arose because of the treaties’ complicated structure. In the U.S., the treaties will require changes in domestic regulations. The Senate was therefore concerned that the treaties had been presented by both Administrations as self-executing—that they would take effect as soon as ratified by the Senate.[2]

In March, The Heritage Foundation stated that “the Senate must be the judge of whether it is right to ratify these treaties as self-executing or whether the treaties must be accompanied by implementing legislation passed by Congress that would define the regulations necessary to give effect to a ratified treaty. The Administration’s responsibility is to work energetically with the Senate to satisfy its concerns.”[3]

The Administration has now accepted, as Heritage predicted, that the Senate would not ratify the treaties as self-executing. Pressure from Dr. Liam Fox, the British Secretary of State for Defense, has been credited by the defense press with encouraging the Administration to cooperate more energetically with the Senate.[4]

Thus, last Tuesday, the committee reported favorably on an amended version of S. 3581, the Defense Trade Cooperation Treaties Implementation Act of 2010. Introduced on July 14, sponsored by ranking Member Senator Richard Lugar (R–IN), and co-sponsored by Senators Jon Kyl (R–AZ), John McCain (R–AZ), and Jim Webb (D–VA), the act modifies the Arms Export Control Act to allow for the enforcement of the treaties and to provide for congressional notification of exports under their provisions. The act also allows the President to issue regulations that implement and enforce the treaties. On Monday, the Senate, by unanimous consent, passed the act as S. 3847. It is now before the House for consideration.

The Calendar Is Tight

The committee’s favorable report on both the treaties and the implementing legislation is welcome, as is the action of the Senate. Both the Senate and the Administration deserve praise for their responsible approach to resolving the serious concerns raised by the committee as it considered the treaties over the past three years.

The committee has studied these treaties with care and, with the Administration, has now come to a clear understanding that the treaties are in the American national interest. The full Senate has unanimously agreed with this conclusion.

With the calendar running short, the House needs to move expeditiously on the implementing legislation. If the treaties are not ratified and the act fails to pass in the current Congress, the committee will have to report the treaties and the implementing legislation again in the next Congress, and the process of education necessary to explain these issues will have to be repeated for new Members of the committee and Congress. Even if no new concerns are raised, this will, at the least, take time.

What the Administration Should Do

The committee’s favorable report on the two treaties with the U.K. and Australia, and on the Defense Trade Cooperation Treaties Implementation Act, is a step forward, and a victory for the commonsense belief that the U.S. should treat Britain and Australia as the close allies that they are. The action of the full Senate is even more welcome, as it demonstrates the strong bipartisan support for the treaties. The Administration should continue to work energetically with the House to secure its support for the act.

Ted R. Bromund, Ph.D., is Senior Research Fellow in the Margaret Thatcher Center for Freedom, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.

Show references in this report

[1]For a fuller assessment of the advantages of this treaty, and a similar treaty with Australia, see Ted R. Bromund, “The U.S.–U.K. Defense Trade Cooperation Treaty Merits Early Consideration,” Heritage Foundation WebMemo No. 2542, July 13, 2009, at http://www.heritage.org/Research/Reports/2009/07/The-US-UK-Defense-Trade-Cooperation-Treaty-Merits-Early-Consideration; Baker Spring, “Defense Trade Cooperation Treaties with Australia and the U.K. Will Improve Security,” Heritage Foundation Backgrounder No. 2107, February 8, 2008, at http://www.heritage.org/Research/Reports/2008/02/Defense-Trade-Cooperation-Treaties-with-Australia-and-the-UK-Will-Improve-Security.

[2]For a fuller assessment of the procedural and constitutional roadblocks to ratification, see Ted R. Bromund, “Now Is the Time to Seek Ratification of the U.S.–Australia Defense Trade Cooperation Treaty,” Heritage Foundation WebMemo No. 2836, March 18, 2010, at http://www.heritage.org/Research/Reports/2010/03/Now-Is-the-Time-to-Seek-Ratification-of-the-US-Australia-Defense-Trade-Cooperation-Treaty.

[3] Ibid.

[4]Liam Fox, “Afghanistan: Standing Shoulder to Shoulder with the United States,” Heritage Foundation Lecture No. 1159, July 7, 2010, at http://www.heritage.org/Research/Reports/2010/07/Afghanistan-Standing-Shoulder-to-Shoulder-with-the-United-States; DefenceManagement.com, “Progress Made on US-UK Trade Treaty,” September 23, 2010, at http://www.defencemanagement.com/news_story.asp?id=14223 (September 23, 2010).

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