Over the last fiscal year, authorized arms exports rose by a total of 13 percent to $192.3 billion, adding thousands of jobs to the U.S. economy and sustaining many thousands more. These increases in both government-to-government and commercial sales of defense equipment by U.S. companies have coincided with efforts by the State Department’s Bureau of Political-Military Affairs and its interagency partners to comprehensively reform and modernize the arms transfer process.
Central to these efforts is the President’s new Conventional Arms Transfer (CAT) Policy, released in April 2018, which aligned U.S. policy on conventional arms transfers with our national and economic security interests. As an element of the CAT Policy, the President directed that the Secretary of State submit a CAT Policy Implementation Plan and make updates to the Unmanned Aerial Systems (UAS) Export Policy.
Building on this guidance, the U.S. Government, led by the Bureau of Political-Military Affairs, is undertaking comprehensive efforts to reform the arms transfer process and to work with allies and partners to ensure they have prompt access to U.S. defense materiel.
After consultation with industry, Congress, and non-governmental organizations, the CAT Policy Implementation Plan was submitted to the President in July 2018 and implementation is underway. The Departments of State, Commerce, and Defense are working closely with industry to improve U.S. policies and processes, including through reforms of the International Traffic in Arms Regulations (ITAR) that will remove outdated regulations and make them easier to use, while ensuring our arms transfers advance the objectives laid out in the President’s National Security Strategy.
The new UAS Export Policy was approved in April and expands opportunities for the export of UAS systems, including via Direct Commercial Sales, while maintaining the requirement for partners to agree to certain Principles of Use for such systems.
Foreign Military Sales:
The value of State Department-authorized government-to-government Foreign Military Sales (FMS) cases implemented by the Defense Security Cooperation Agency rose 33 percent to $55.66 billion in FY18 from $41.93 billion in FY 17. This includes new FMS cases and changes to previous cases, representing when a partner nation signs and makes the initial deposit on a Letter of Offer and Acceptance.
Major implemented cases in FY18 include Littoral Combat Ships for Saudi Arabia ($6.5B); F/A-18 aircraft for Kuwait ($5.1B); Patriot Air and Missile Defense Systems for Poland ($4.6B), Romania ($756M), and Saudi Arabia ($1.6B); AH-64 Apache helicopters for the UAE ($1.9B); F-16 aircraft for Bahrain ($2.1B); A-29 aircraft for Nigeria ($500M); and AH-64 Apache helicopter upgrades for the Netherlands ($1.07B).
Total Value of Implemented FMS Cases:
-- FY17: $41.93B
-- FY18: $55.66B
Direct Commercial Sales:
The value of privately contracted Direct Commercial Sales (DCS) authorizations licensed by the State Department totaled $136.6 billion in FY18, a 6.6 percent increase from $128.1 billion in FY17. The totals include the value of hardware, services, and technical data.
Total Value of Approved DCS Cases:
-- FY17: $128.1B
-- FY18: $136.6B
Current year numbers are not predictive of future year sales, which may increase or decrease due to several factors, including fluctuating foreign defense budgets, regional security issues, and ongoing changes to defense trade licensing jurisdiction with changes in technology.
In the coming year, the Administration will continue to align U.S. conventional arms transfer policy with U.S. national, economic security and foreign policy objectives and in support of the defense industrial manufacturing base.