U.S. Arms Sales and Defense Trade
(Source: State Dept. Bureau of Political-Military Affairs; issued July 27, 2017)
The United States is committed to strengthening allies and partners worldwide so that they meet their own legitimate self-defense needs and can improve their capabilities to operate beside U.S. forces to address shared security challenges.

The U.S. Department of State’s Bureau of Political-Military Affairs (PM) oversees most government-to-government arms transfers and the commercial export licensing of U.S.-origin defense equipment and technologies, consistent with the Arms Export Control Act, the Conventional Arms Transfer Policy, the Foreign Assistance Act of 1961, the International Traffic in Arms Regulations, and other statutory authorities and relevant international agreements.

-- Arms sales and defense trade are key tools of foreign policy with potential long-term implications for regional security. For this reason, the United States takes into account political, military, economic, arms control, and human rights conditions in making decisions on the provision of military equipment and the licensing of direct commercial sales to any country. Each proposed transfer is carefully assessed on a case-by-case basis and approved only if found to further U.S. foreign policy and national security interests. In addition, major defense transfers and sales may be subject to Congressional notification.

-- Review and monitoring are integral components of the process for U.S.-origin defense equipment delivered to any recipient nation. The United States works to ensure U.S.-origin defense equipment is being used in the manner intended and consistent with the agreement or licenses under which the arms were transferred. The United States is committed to expediting, when possible, defense transfers to U.S. allies and partners, while at the same time seeking to prevent access to U.S.-origin defense technologies by hostile state and non-state actors. Recipients of U.S.-origin defense articles must agree to make items available for end-use monitoring for the life of the equipment and may not retransfer equipment to a third party without first receiving U.S. authorization.

-- Properly regulated defense transfers support the U.S. defense industrial base and reduce the costs of procurement for our own military. The U.S. defense industry directly employs over 1.7 million people across our nation. These individuals and the companies they work for represent a key part of American entrepreneurship and innovation, helping to maintain the United States’ status as the world leader in the defense and aerospace sectors and ensuring our armed forces maintain their military edge.

Foreign Military Sales (FMS)

-- Under FMS, the United States government manages the transfer of approximately $40 billion per year in defense equipment purchased by foreign allies and partners. PM’s Office of Regional Security and Arms Transfers (PM/RSAT) manages the FMS process, in close partnership with the Department of Defense’s Defense Security Cooperation Agency (DSCA), which implements FMS cases by working through the military services to negotiate with U.S. defense contractors. PM/RSAT further manages the FMS process by providing the customer with training, sustainment, and contractor logistics support for the lifetime of the sale.

-- The FMS sales process begins when a country submits a formal Letter of Request that specifies a desired military capability and a rough price. Sales are approved following U.S. government review and, when required, after Congressional notification. After the sale is approved, the DSCA issues a Letter of Offer and Acceptance (LOA) that specifies the exact defense articles, training, and support to be delivered.

-- Processing time for FMS cases may vary; they can take months to negotiate, especially for major defense articles that require modifications to standard U.S. systems. Due primarily to the time required for construction of sophisticated defense systems such as fighter aircraft, countries often do not receive delivery of the full package until years after the LOA is finalized. Major FMS sales that have been formally notified to Congress are publicly announced on the DSCA website: http://www.dsca.mil/major-arms-sales.

Direct Commercial Sales (DCS)

-- Under DCS, PM’s Directorate of Defense Trade Controls provides regulatory approvals for more than $110 billion per year in sales of defense equipment, services, and related manufacturing technologies controlled under the 21 categories of the U.S. Munitions List (USML). These sales are negotiated privately between foreign end-users and U.S. companies.

-- Under U.S. law, any U.S. company or individual involved in certain activities involving the items enumerated on the USML is required to receive an approved export license or other approval before providing any USML regulated item, technical data, or service to a foreign end-user.

-- As with FMS, export licenses approved under DCS are approved following an intensive U.S. government review and, as required, after Congressional notification. Export licenses are valid up to four years. Authorizations for defense services are also required and may last for longer timeframes. Licenses and authorizations may be extended or amended as needed.

-- DCS cases are considered to be proprietary agreements between the foreign governments or companies and the U.S. defense contractor. However, certain information about cases notified to Congress is published quarterly in the Federal Register, in fulfillment of requirements in the Arms Export Control Act.

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