At a press briefing on Wednesday, John Rood, the Acting Under Secretary of State for Arms Control and International Security, fielded questions about the Bush Administration’s new Export Control Directive – the latest attempt to reduce delays and inefficiencies in the State Department’s export control system. If implemented properly, some of the proposals could help to address long-standing staffing shortages, jurisdictional issues, and Information Technology (IT) problems. Improvements in these areas could help to reduce licensing delays, which, in turn, could alleviate pressure on the State Department to relax export controls.
Very little in the directive is new or surprising*, and the administration has not released enough information on most of the specific reforms in the directive to assess their likely impact. The most notable proposal is for a self-financing mechanism aimed at generating additional resources for Directorate of Defense Trade Controls (DDTC) – the chronically under-staffed office that reviews and processes licenses for commercial arms exports. Rood declined to provide details about the mechanism but did say that revenue would be pegged to the number of licenses received by the State Department (i.e. when license requests go up, the amount of revenue available to process them would go up), and that the revenue would supplement funding from existing sources. It is unclear how many additional staff the State Department hopes to hire with the expected revenue, or how they intend to avoid potential conflicts-of-interest associated with the salaries of regulators being funded by the corporations that they regulate.
The Under Secretary also underscored the importance of a new “guideline” that requires DDTC to turn around all license applications within 60 days (with some exceptions), and an interagency dispute mechanism for resolving disputes with Commerce over the jurisdiction of specific commodities (i.e. whether they belong on the Commerce Control List or the US Munitions List). Similar guidelines established by DDTC for itself and imposed on DDTC by Congress have generally not had the intended effect, and it is not self-evident how another guideline – even one from the President – will yield different results unless it translates into significantly more resources for DDTC.
Two items of possible interest from a national security/proliferation perspective were largely ignored at the press conference: additional intelligence support for “the timely adjudication of defense trade licenses” and a “multi-agency working group” to help “improve procedures for conducting export enforcement investigations.” The FAS has requested additional information about these items and will post summaries of any responses on the Strategic Security Blog.
If the self-funding mechanism generates enough additional revenue to hire more licensing officers and avoids the potential conflict-of-interest identified above, it would be a solid step in the right direction. But that’s a big “if,” and it would only address one of several problems with the licensing system recently identified by the Government Accountability Office. In addition to “human capital challenges,” the GAO also identified procedural weaknesses, problems with the State Department’s D-trade electronic licensing system, and a failure on DDTC’s part “to identify the root causes of problems and to develop sustainable solutions” through systematic analysis of licensing data. The State department is reportedly pursuing changes to D-Trade and a “review of [their] organizational alignment” that may address some of the other concerns raised by GAO, but it is too soon to tell.
While it is impossible to determine from the outside which of these problems is most to blame for recent licensing delays, there is little doubt that DDTC is under-staffed. According to the Government Accountability Office, the number of licensing applications jumped from around 55,000 in FY2003 to approximately 80,000 in 2007, but the number of licensing officers available to process those applications is approximately the same (around 34).** In a 2006 report to Congress recently obtained by the FAS, the State Department estimated that it needed three additional licensing officers for every 8% increase in licenses received annually since 2003. By its own estimate, therefore, the State Department should have added 15 licensing officers to DDTC’s staff since 2003.
State Department officials are not the only ones who think that DDTC is short-staffed. At a July 2007 hearing on export controls, House Foreign Affairs Committee Chairman Tom Lantos called it “absurd in the extreme” that the State Department “has only 37 licensing officers to process nearly 70,000 applications, while Commerce boasts over 70 officers for a comparatively-paltry workload of 23,000 licenses.” During the same hearing, Christopher Padilla, the Assistant Secretary of Commerce for Export Administration, also indicated that he thought that DDTC was understaffed. “I don’t think the State Department has sufficient resources to do the job,” he remarked.
The need for a self-funding mechanism raises the larger question of why the powers-that-be at the State Department haven’t secured more money for DDTC through the regular appropriations process. It is hard to imagine a more important task than ensuring the timely delivery of legitimate defense exports to important allies while preventing terrorists, criminals, and rogue regimes from acquiring U.S. weapons. Yet DDTC’s chronic staffing problems suggest that arms export licensing continues to be a budgetary afterthought.
Many institutions share the blame for this situation. At a July 2007 hearing of the House Subcommittee on Terrorism, Nonproliferation, and Trade, Rep. Brad Sherman (D-CA) summarized the dynamic that led to the chronic under-staffing in the following way:
“The administration has not asked for the money to get the job done in a timely basis. The State Department then raids the general account so that DDTC doesn’t get the money that Congress intends; Congress doesn’t line item DDTC [s]o as to prevent that raid. I see a fair number of lobbyists in this room must share some of the blame for not using some of their lobbying muscle to solve these problems. Of course I share some of this blame—until we got trade jurisdiction in the subcommittee, I had not spent a whole lot of time looking at these issues.”
Failure to adequately staff DDTC has strained the licensing system and provided fodder for advocates of defense export ‘reform,’ whose proposals include, inter alia, exempting broad swaths of the USML from licensing requirements. The latest incarnation of the exemption approach to reducing licensing delays is a pair of Defense Trade Cooperation Treaties with the UK and Australia, which were forwarded to the Senate last fall. The potential risks associated with licensing exemptions are well known and have been highlighted most recently in reports by the Government Accountability Office and the House International Relations Committee. Without access to the treaties’ implementing arrangements (which are still being finalized), it is impossible to determine whether – and to what degree – these risks apply to the treaties. Regardless, it may be wise to postpone the pursuit of potentially problematic paradigmatic shifts in the licensing process until the effect of DDTC’s current push to increase staff, improve D-Trade, and identify the root causes of the licensing delays is known.
*This assumes that the fact sheet on the directive identifies all of the substantive items in the directive itself. The State Department has not released the directive.
**Licensing officer positions filled (Source: “State Department Needs to Conduct Assessments to Identify and Address Inefficiencies and Challenges in the Arms Export Process”, GAO-08-89, p. 13).
“President Issues Export Controls Directive to Reform U.S. Defense Trade Policies and Practices”, White House Press Release, 22 January 2008.
“State Department Needs to Conduct Assessments to Identify and Address Inefficiencies and Challenges in the Arms Export Process”, Government Accountability Office, November 2007.
“Export Controls: Are We Protecting Security and Facilitating Exports?”, House Subcommittee on Terrorism, Nonproliferation and Trade, 26 July 2007, hearing transcript.
“Vulnerabilities and Inefficiencies Undermine System’s Ability to Protect U.S. Interests”, Government Accountability Office, 26 July 2007.
“Licensing Exemptions, Round Two: The Defense Trade Cooperation Treaty,” Strategic Security Blog, 20 July 2007.
Report to Congress on Defense Trade Licensing, State Department, 2006 (obtained by the FAS under the Freedom of Information Act).
U.S. Weapons Technology at Risk: The State Department’s Proposal to Relax Arms Export Controls to Other Countries, House International Relations Committee, 1 May 2004.
“Defense Trade: Lessons to Be Learned from the Country Export Exemption,” Government Accountability Office, GAO-02-63, March 29, 2002.