U.S., UK Sign Defense Trade Cooperation Treaty

On June 26, British Prime Minister Tony Blair and President George W. Bush signed the Defense Trade Cooperation Treaty (DTCT). If ratified by both countries, the treaty would create a streamlined system for defense trade within a community encompassing the two governments and approved British and U.S. arms manufacturers. The agreement comes after years of discussion and numerous proposals to reduce the amount of paperwork involved for arms companies to gain export licenses to friendly nations. As a treaty, it would need to be approved by a two-thirds vote of the Senate. It also needs to avoid scrutiny in the House, which has stymied previous efforts at modifying export control laws.

According to Department of State officials who have seen drafts of the treaty, it would create an “approved community” of defense firms in the United Kingdom and the United States that would be pre-approved by both governments and authorized to export material into and within the community. In an Aug. 10 press release, the State Department explained that authorized end uses would fall under four major categories: “Combined U.S.-UK military or counterterrorism operations; joint U.S.-UK cooperative security and defense research, development, production, and support programs; specific security and defense projects that are for UK Government use only; and U.S. Government end-use.”

All transfers to the United Kingdom would be covered by its Official Secrets Act and would be considered classified, whatever the level of security designated in the United States. Therefore, companies that violated the rules would be subject to tougher prosecutions. Re-exports outside of the community would require a company to obtain a license, but the details of how the United States or the United Kingdom could directly block exports to a third party are still being worked out in the implementing arrangements.

Further specifics of these arrangements, contained in 21 articles of the treaty, remain to be seen. Senate members and their aides are withholding judgment until they are given the full and final text.

A senior Senate aide told Arms Control Today that Senate reaction to the treaty had been mixed. Lawmakers would be reluctant to stop a deal for a close ally such as the United Kingdom but are also intent on defending their constitutional authority and complying with pre-existing law. The aide also questioned the administration’s tactic of signing the treaty without prior consultation with key senators or their staff, leaving many past questions unaddressed.

Items that are still to be decided include which exports on the U.S. Munitions List will be exempt from the treaty and which will still require licenses, how companies will be approved for entrance into the community, how they will be monitored, and what criteria would constitute cause for expulsion.

Much of this effort stems from an earlier agreement, the Defense Trade Security Initiative (DTSI), forged under President Bill Clinton in 2000. (See ACT, June 2000.) The DTSI also sought to cut down the amount of paperwork required by the Departments of State and Defense for export licenses to NATO allies, Australia, and Japan.

The DTSI consisted of 17 separate initiatives to expedite arms exports to allies, relax or waive licenses for countries that signed bilateral agreements, and reduce in general the amount of paperwork in the process. Bilateral agreements were slow in coming, however, and an attempt to amend the Arms Export Control Act for Australia and the United Kingdom failed after opposition in the House in 2004. It remains unclear if the act would have to be amended to facilitate the new treaty.

Despite streamlining under the DTSI, the United States still struggles to keep pace with an increasing number of export license requests from allies. The State Department’s Directorate of Defense Trade Controls reported that it reviewed more than 70,000 cases in 2006. In testimony to the House Committee on Foreign Affairs on July 26, Stephen Mull, acting assistant secretary of state for political military affairs, said that this number was up from 66,000 in 2005 and was anticipated to rise to 80,000 in the current fiscal year.

The new treaty appears to address many of the concerns that brought down the more far-reaching elements of the DTSI, including concerns about re-exportation to third parties and the legal standards of the United Kingdom, according to sources who have seen drafts of the treaty.

John Rood, assistant U.S. secretary of state for international security and nonproliferation, remained positive in comments to the press. “We are still in the process of consulting and briefing and informing the relevant staff and members about the treaty,” he stated, “but I’d say based on our initial conversations that we’re optimistic this is something that can get the advice and consent of the Senate,” adding that he would expect action on the treaty by the end of the year.

Rood also confirmed that Congress would still have to approve the sale of individual items worth more than $25 million and of batches of items or services worth more than $100 million.

Still, the State Department is emphasizing the special relationship with the United Kingdom and appears unsure whether to extend or replicate the treaty to other countries. Rood said the treaty with the United Kingdom “is fitting” and that “[i]f other countries approach us we’d have to ask, ‘Do they have the same close relationship?’ I don’t know if we’ll do anything like that or not.”

Canada can already obtain waivers on licenses to export items on the U.S. Munitions List but not technology, so the treaty would be unique. The U.S. government is also hoping for easier access to counterterrorism methods and materials that the British have developed.

Although the DTCT would not have to be approved by the House, Senate aides said they would consult closely with their congressional counterparts. Rep. Tom Lantos (D-Calif.), chairman of the House Committee on Foreign Affairs, expressed some misgivings at the July 26 hearing. He said that he would withhold judgment until the details of the treaty were worked out but that “these types of agreements are not a panacea for reducing [the State Department’s] licensing workload…. I strongly advise the administration to reflect on past experiences and to consult with Congress this time around, especially the foreign affairs committees of the House and the Senate, before finalizing these changes.”

Uncertainty in the British defense industry may also cause problems. The premier British defense contractor, BAE Systems, is currently being investigated by the U.S. Department of Justice for corruption in dealings with Saudi Arabia.

The United Kingdom’s Serious Fraud Office started, but did not conclude, an investigation into BAE’s al-Yamamah deal with Saudi Arabia. According to reports in The Guardian newspaper, the British government under Prime Minister Margaret Thatcher allegedly facilitated a bribe of more than a billion dollars from BAE to Saudi Arabian officials to close a multibillion-dollar aircraft contract to Riyadh. Blair’s government halted inquiry into the deal on national security grounds last December.