15 June 2012
US Promotes Jobs by Deathcraft
http://www.state.gov/r/pa/prs/ps/2012/06/192408.htm
Briefing on Department of State Efforts to Expand Defense Trade
Special Briefing
Andrew J. Shapiro
Assistant Secretary, Bureau of Political-Military Affairs
Via Teleconference
June 14, 2012
MR. TONER: Thank you so much. And thanks to everyone for joining us. Promoting
U.S. businesses abroad and expanding U.S. exports our top priorities for
the U.S. Department of State. And Assistant Secretary of State for Political
and Military Affairs Andrew Shapiro joins us today to talk about how the
Bureau of Political-Military Affairs is engaging with allies and partners
to expand the defense trade thats critical both to our national security
as well as a part of our larger economic statecraft efforts on this Economic
Statecraft Day.
Just before I hand it over to Assistant Secretary Shapiro, I just want to
remind everybody this is an on-the-record briefing and youll have a
chance for questions after he says a few words. So go ahead, Assistant Secretary.
ASSISTANT SECRETARY SHAPIRO: Thank you, Mark. And Im delighted to be
able to speak to you all today as part of Global Economic Statecraft Day.
And as Mark noted, Global Economic Statecraft Day is a global event that
were holding to highlight Americas commitment to put strengthening
American jobs at the center of our foreign policy and to use diplomacy to
advance Americas economic renewal. Were using diplomatic tools
to strengthen the economic foundations of Americas global leadership.
And we are elevating the strategic role of economics, both in what we choose
to prioritize and how we pursue solutions to some of the worlds most
pressing challenges.
Our work in the Political-Military Bureau, to expand security cooperation
with our allies and partners, is critical to Americas national security
and economic prosperity. And it is also an important part of the State
Departments economic statecraft efforts. It also serves critical national
security interests by helping allies and partners more capably secure their
countries and contribute to international security efforts. And thats
a point that I want to emphasize. The purpose of our sales is to serve national
security interests and that is a theme that runs through every sale that
we conduct. We evaluate for how it will support U.S. national security and
foreign policy interests.
So let me be clear about why the State Department oversees U.S. security
cooperation, and thats because security cooperation is fundamentally
a foreign policy act. It is therefore the Secretary of State that is given
the authority to oversee and authorize all arms sales in order to ensure
they advance U.S. foreign policy.
The Bureau of Political-Military Affairs, which I oversee, implements the
Secretarys authority in this area and ensures that any assistance in
the U.S Government that the U.S. Government provides is fully in line
with U.S. foreign policy. All sales and arms transfers are reviewed and assessed
through the Conventional Arms Transfer Policy. This means we take into account
political, military, economic, arms control, and human rights conditions
in making decisions on the provisions of military equipment and the licensing
of direct commercial sales to any country. We only allow a sale after we
carefully examine issues like human rights, regional security, and
nonproliferation concerns, and determine a sale is in the best foreign policy
and national security interests of the United States.
Review and monitoring are also an integral part of our work. We work to make
sure that items of U.S. origin are being used in the manner intended and
are consistent with our legal obligations, foreign policy goals, and our
values. If a license or transfer is approved, recipients are bound by end
use restrictions and conditions. This grants U.S. Government officials full
access to monitor how that defense article is being used throughout its lifetime.
We also investigate all potential violations and take appropriate action
depending on the nature and scope of the infraction.
Additionally, the transfer of items above a certain value requires the approval
of Congress. We therefore work closely with Congress on all significant sales.
The arm to be quite frank, the arms transfer process sometimes causes
consternation among our international partners who will gripe about onerous
rules and procedures. And at times it makes countries, to be honest, reluctant
to partner with the United States. But these safeguards are critical to our
foreign policy, and I can assure you that they are aggressively enforced.
So therefore, what I think is remarkable is that despite our very high bar
for approving transfers and our aggressive monitoring, more and more countries
want to partner with the United States. At the State Department, when we
deem that cooperating with an ally or partner in the security sector will
advance our national security, we advocate tirelessly on behalf of U.S. companies
abroad, and I think I have the frequent flyer miles to prove it.
Its no longer just our ambassadors who promote U.S. security cooperation
abroad. Senior State Department officials regularly advocate on behalf of
the U.S. bidders on foreign government and foreign military procurements.
We do so when we meet with officials on our travels abroad, on margins of
international conferences, and in regular diplomatic correspondents to foreign
government officials. And these efforts are having an impact. Despite the
global economic strain, demand for U.S. defense products and services is
stronger than ever.
Last week, we released the 655 Report, which is an annual report of defense
articles and services that were authorized for export. This report focuses
on direct commercial sales, and it showed that there was a more than $10
billion increase in Fiscal Year 2011 in items authorized for transfer. In
2011, the Directorate for Defense Trade Controls, which is part of the
Political-Military Bureau, processed more than 83,000 licenses, the most
ever. Today, I can confirm that this is already a record-breaking year for
foreign military sales, which are government-to-government sales. We have
already surpassed $50 billion in sales in Fiscal Year 2012. This represents
at least a $20 billion increase over Fiscal Year 2011, and we still have
more than a quarter of the fiscal year left.
To put this in context, Fiscal Year 2011 was a record-setting year at just
over 30 billion. This fiscal year will be at least 70 percent greater than
Fiscal Year 2011. These sales support tens of thousands of American jobs,
which is welcome news for the economy.
So Ill just take a minute or so to briefly outline why I think we are
seeing such strong interest in U.S. systems. First, its because countries
want to partner with the United States of America. This Administration has
worked aggressively to improve Americas image abroad, to build new
partnerships, and strengthen existing ones. We have seen tremendous growth
and sales with developing countries and emerging powers such as Brazil and
India, and this speaks volumes about our diplomatic efforts.
For a country to be willing to cooperate in the area of national defense,
perhaps the most sensitive area for any nation, they have to be sure about
the nature of the relationship with the United States. When a country buys
an advanced U.S. defense system through our FMS, DCS, or Foreign Military
Financing programs, they arent simply buying a product. They are also
seeking a partnership with the United States. These programs both reinforce
our diplomatic relations and establish a long-term security relationship.
The complex and technical nature of advanced defense systems frequently requires
constant collaboration and interaction between countries over the life of
that system, decades in many cases. This cooperation therefore helps build
bilateral ties and creates strong incentives for recipient countries to maintain
good relations with the United States. The fact that more countries want
to deepen their defense trade partnership with the United States is a sign
that our broader diplomatic efforts are having an impact.
For many countries, procurement decisions arent simply based on the
specifications of the given system. Our advocacy helps demonstrate that the
U.S. Government believes these sales are critical to our diplomatic relationship.
Second, countries want to buy the best. And to get the best, they rightly
turn to U.S. defense systems. These systems are made in America, and the
growth in defense sales abroad demonstrates the capabilities of American
manufacturing and of American workers. This Administration has worked hard
to support the U.S. defense industry abroad, because it supports our national
security and supports jobs here at home.
For example, our agreement in December to expand our security cooperation
with Saudi Arabia is projected to have a significant impact on the U.S. economy.
According to industry experts, this agreement will support more than 50,000
American jobs. It will engage 600 suppliers in 44 states and provide $3.5
billion in annual economic impact to the U.S. economy. This will support
jobs not only in the aerospace sector, but also on our manufacturing base
and support chain, which are all crucial for sustaining our national defense.
Lastly, we are also working to improve our ability to cooperate with our
partners. Nothing shows our commitment to expanding U.S. exports more than
our export control reform efforts. The current system operates under laws
written in the 1970s and was designed to address the challenges of the Cold
War. Its bad for U.S. business, its bad for enforcing our export
control requirements, and it hurts our ability to prosecute those who violate
U.S. export control laws.
The goals of our export control reform efforts are ultimately about making
sure that our system protects the things it needs to protect. This will allow
the U.S. Government to focus its limited resources on safeguarding and monitoring
the most sensitive items. Our reform efforts will also allow us to streamline
access to export-controlled items for our close allies. This will help improve
interoperability with our allies as well as bolster our defense industrial
base. And we are making substantial progress. We have almost finished our
interagency work on all the list categories, and were working to have
this process completed by the end of the year.
Another way we have worked to facilitate defense trade is through the defense
trade treaties with the UK and Australia. This past April, the United States
and UK signed an exchange of notes which brought the U.S.-UK Defense Trade
Treaty into force. This treaty is the first of its kind and allows for the
more efficient transfer of certain defense articles between the U.S. and
UK. Were also making progress in the implementation of the treaty with
Australia, which we hope to be completed in the next year.
So with that, Id be happy to take any questions.
MR. TONER: Okay. Were ready to take any questions you might have now,
Operator.
OPERATOR: Okay, thank you. We will now begin the question-and-answer session.
If you would like to ask a question, please press *1. Please un-mute your
phone and record your name clearly when prompted. If you need to withdraw
your request, press *2. Again, to ask a question, its *1. It will be
one moment, please, for the first question.
And our first question comes from Kate Brannen with Defense News.
QUESTION: Hi. I just wanted to clarify quickly a point and then ask a question.
You said $50 billion in sales so far for 2012. Are those sales that the State
Department has authorized? Is that the correct way to phrase it?
ASSISTANT SECRETARY SHAPIRO: Well, I believe that those are and Ill
confirm this for you, but I believe that those are ones in which theyre
authorized and the sales have been the contracts have been negotiated.
QUESTION: Okay. And I was hoping to get an update on some of the changes
the State Department has proposed to the Congressional notification process.
I know there was some pushback on the Hill, and I was just curious what the
current status is of are you using that new notification process to
inform Congress of sales?
ASSISTANT SECRETARY SHAPIRO: Yes, we are. And again, changes to the notification
process were designed to ensure to give Congress more information
earlier than theyve had it before, but also to provide some predictability
to the length of the process and to identify which sales Congress has the
most concerns about, so were able to address those concerns. But yes,
we are proceeding with the new process.
QUESTION: Okay, thank you.
MR. TONER: Next question, please.
OPERATOR: And our next question comes from Eli Lake with Newsweek.
QUESTION: Hi. Thank you very much, Assistant Secretary. Could you break down
in a little bit more detail what is responsible for this pretty significant
uptick for what you anticipate for this fiscal year? Was it just more than
the Saudi Arabia can you get into that?
And if I can sneak in another one, how does the these latest numbers
kind of effect next months negotiations on, I guess, what would be
a kind of global arms control arms trade treaty?
ASSISTANT SECRETARY SHAPIRO: For your first question, obviously the sale
to Saudi Arabia was very significant. Its a sale worth $29.4 billion.
And Saudi Arabia signed a letter of offer and acceptance in December for
the sale, up to 84 advanced F-15SA fighter aircraft. It also includes upgrades
of to its current fleet of 70 F-15 aircraft, as well as munitions,
spare parts, training, maintenance, and logistics. But this number also includes
the sale of the Joint Strike Fighter to Japan, which is valued at approximately
$10 billion.
In terms of the arms trade treaty, Ill have to admit thats not
an issue that my bureau follows closely, and we work closely with our
nonproliferation bureau led by Tom Countryman on this, so Im going
to allow boot your question over to him and get you back an answer
on that.
QUESTION: Thanks.
MR. TONER: All right. Next question, please.
OPERATOR: And next is Jen Dimascio with Aviation Week. And Jen, your line
is open. Check your mute button.
QUESTION: Hello.
OPERATOR: Yes. Please continue.
QUESTION: Okay, sorry. I wanted to follow up on this record breaking year
and kind of push it forward to next year. I mean, are you anticipating another
record breaking year in FY13? And do you expect additional sales from countries
like India?
ASSISTANT SECRETARY SHAPIRO: Its too early to predict what FY13 will
look like. Obviously, were going to continue to press and advocate
for U.S. arms sales. We are hopeful that arms sales to India will increase.
Weve made tremendous progress in the relationship over the last decade.
We went from nearly zero sales to about $8 billion in sales.
Going forward, theres a number of tenders which we hope were
successful on, including a tender for Apache helicopters. And we continue
to advocate for them, and were hopeful that well be successful
on a number of sales over the coming year with India.
MR. TONER: All right. Next question please.
OPERATOR: And next is Austin Wright with Politico.
QUESTION: Hi. Can you give us a quick update on your efforts to push some
export control reform initiatives through Congress? And theres been
some grumbling on the Hill, and Im wondering if you think youre
going to make progress on this, given that many administrations have tried
and have been unable to get these kind of reforms through the Hill.
ASSISTANT SECRETARY SHAPIRO: Right. Thanks. As you know, export control reform
has many components, one of which is to revise both the State U.S. Munitions
List and the Commerce Control List so that there is a clear distinction between
what is controlled on each list. And our goal has been to complete the list
reviews and publish the revised control list categories in proposed form
this year and to both publish the revised categories in final form on a rolling
basis, and that remains the goal. Weve almost finished our interagency
work on all the list categories, and we have people working from across our
the interagency working hard on this as we speak, and we are committed
to meeting this goal.
I know that a lot of others have tried and failed and that there is skepticism
that we can get this done, but let me be clear: Any speculation that export
control reform is stalled is absolutely false. Were making significant
progress, interagency teams are making progress every day, and this has been
a long, tough slide but were close to the finish line. And we published
a number of categories and we have more in pipeline. Were nearly halfway
through rewriting the categories, and we have thus far briefed our Congressional
committees on 13 categories.
QUESTION: Thank you.
MR. TONER: Great, thanks. Next questioner, please.
OPERATOR: And as a reminder, press *1 to ask a question. And next is Raymond
Barrett with PAR.
QUESTION: Would you be able to expand on how completing that list and the
categories and how maybe some of the individual categories might boost the
domestic industry here in the States?
ASSISTANT SECRETARY SHAPIRO: Well, for example, we anticipate that
and Secretary Gates was quite eloquent in describing some of the challenges
in our current export control reform system where a part or component for
a previously approved aircraft would need a license. And its our hope
that for those types of items, including thousands of parts and components,
that once they move from the U.S. Munitions List to the Commerce Control
List, itll improve the ability of our partners to acquire those parts
and components (inaudible) it will streamline the system, make it easier
for our partners to acquire those types of parts and components and help
our manufacturing base as a result.
QUESTION: And also, just you mentioned that the Defense Trade Cooperation
Treaty with Australia might be done by the end of the year. Is that treaty
going to be as extensive in nature as the one with the UK? As in so
if you can maybe compare the two.
And also, are there any other nations that youre looking at signing
a similar treaty with? Are there any ones that are (inaudible) proposed,
that are next on the list after Australia?
ASSISTANT SECRETARY SHAPIRO: Well, there may be some minor differences in
the text of the defense cooperation treaties between the UK and Australia.
We anticipate that they will have the same broad impact in encouraging defense
trade between both of our between both the UK and Australia and the
United States. And so we very much anticipate that this will have an impact.
What was your second question again?
QUESTION: Basically, whos next? Okay, so
ASSISTANT SECRETARY SHAPIRO: Oh. Ill be quite clear. I testified before
Congress that these would be that we would not that the
Administration would not seek any further defense cooperation treaties. So
any decision to reverse that will have to leave be left to my successor.
QUESTION: All right.
ASSISTANT SECRETARY SHAPIRO: Okay.
QUESTION: Thank you.
OPERATOR: And our next question comes from Larry Shaughnessy from CNN.
QUESTION: Hello. This is Larry. My question is about the Secretarys
comments earlier this week alleging Russia is selling armed attack helicopters
to Syria. How does the Department answer the Russian insistence that the
U.S. is supplying crowd control weapons to places like Bahrain, and how do
these issues differ?
ASSISTANT SECRETARY SHAPIRO: Well, I dont have a lot to add to
Torias response from yesterday where she and today where shes
directly addressed this. But what I will say is its a totally specious
comparison. Our we have made clear that were not selling equipment
to Bahrain now that can be used for internal security purposes until there
is improvement on human rights; and whereas, as Secretary Clinton pointed
out, the sales to Syria are directly implicated in attacking innocent people,
innocent civilians. So we believe that that comparison does not hold water.
MR. TONER: Next question, please? And time for just a couple more, I think.
OPERATOR: Okay. And our next question comes from Adam Behsudi with Inside
U.S. Trade.
QUESTION: Yes. Hi. I wanted to youd mentioned earlier that the
goal on the export control reform would be to publish all the proposed rules
this year and then final rules on a rolling basis. I mean, how many final
categories or final rules for categories do you expect to be done this year,
if any? And is there an effort to get more of that done based on the fact
that its an election year, and maybe if theres a change in
administration this wont be picked up as well by the next White House?
And then finally, what does the in terms of Congressional pushback
on wanting more notification on some of the categories that on the
items that are moving from one category to another, I mean, what is State
Department doing in terms of working with Congress on their on the
38 Section 38(f) notification process?
ASSISTANT SECRETARY SHAPIRO: In response to your question, Im not going
to give you a precise estimate of how many will be published, because we
do want to consult with Congress. And this will be a dialogue with Congress,
and we want to make sure we have take their concerns into account
as were going through this system. And we intend to have robust
consultations with Congress before we issue 38(f) notifications.
In terms of the timing, my view is by January of next year well either
be done or well be so close to the goal line that itll just be
up to the next administration to dive over the goal line and do a touchdown
dance.
MR. TONER: Great, thank you. And I think its going to have to be our
last question, unfortunately.
OPERATOR: And our last question comes from Jim Berger with Washington Trade
Daily.
QUESTION: Yeah. Thank you. I guess I dont know I dont
think you answered the second part of the previous question, but have you
worked out a system with Congress on notifying as the products move from
the Munitions List to the CCL? As I understand it, its such a large
number, its very impractical to do it one by one.
ASSISTANT SECRETARY SHAPRIO: Weve discussed we are having discussion
with Congress on each of the categories as they come up. And our goal, as
I mentioned, is to have robust consultations with Congress. And we intend
to follow the law regarding Congressional notification. And so we will provide
the requisite notification for any of these changes to the United States
Munitions List or Commerce Control List.
But this is again, this is an iterative process. We are having discussions
with Congress on a continuing basis about how best to provide them the
information they need and solicit their input.
QUESTION: Thank you.
MR. TONER: Well, thank you all for joining us. And thanks certainly to Assistant
Secretary Shapiro. Hope it was informative, and have a great afternoon.
PRN: 2012/990
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