Defense Trade IssuesFrank Ruggiero, Deputy Assistant Secretary of State for Defense Trade and Regional Security
Interview by Vago Muradian of Defense News
April 21, 2008
Since taking office last May, Frank Ruggiero — with the backing of the White House — has proved instrumental in speeding reforms to the U.S. military export system.
U.S. allies and industry for years have complained it takes too long to get permission to receive U.S. systems and technology. In January 2007, the Government Accountability Office found a backlog of 10,000 licenses and listed State’s management of export controls as a troubled function.
President George W. Bush, who wants Senate approval of defense trade treaties with Britain and Australia, decided to make a final reform push. On Jan. 22, Bush issued National Security Presidential Directive (NSPD) 56, which specified new export guidelines.
Q. It’s been three months, but industry says it’s still unclear about NSPD 56. Can you elaborate?
A. The main objective of NSPD 56 is to produce a system that has the transparency, predictability and efficiency industry and allies wanted. We were ordered by the president to set up a system where within 60 days, every single license gets a decision. That’s the primary take-away of the NSPD, in my opinion. It forces us to establish an interagency mechanism that allows for all these cases to be done in an efficient and transparent manner.
In any case over 60 days, the officer would have to come in and explain why the case is taking over 60 days to clear. In summer 2007, we had nearly 700 licenses that were over 60 days. As of April 16, that’s down to 67. An average license takes about 18 days to process, a 50 percent reduction from last summer. We’ve also dropped backlog by 50 percent. As part of the president’s directive, we published in the Federal Register April 14 the exceptions why we could go over 60 days.
Remember, we have two functions under the Arms Export Control Act: keep things from getting to potential adversaries, and get our allies the stuff they need to be interoperable and fight with us.
We do the first part really well; we are now focused on getting our allies what they need.
Q. Critics complain that commercial helicopters can become military if interior lights from military aircraft are used on them. Is that changing?
A. Three significant policy changes have happened over the past year; some are directly linked to and are included in the NSPD 56.
The primary policy change is the president’s decision to sign defense trade treaties with Australia and the United Kingdom. This is a paradigm shift in how the U.S. government does export controls. We are moving from transactionalbased export licenses, of which we did 8,000 last year with the U.K. and Australia, many for spare parts for nonlethal systems, and said ‘yes’ to 99 percent of them. By not having to process those licenses, we can redirect our resources to functions that are more directly linked to national security or foreign policy.
Under the treaties, we estimate 70 percent of those licenses go away. If an American company decides it wants to export something to Australia or the U.K., it self-determines that it meets the parameters of the treaty and without contacting the U.S. Government it exports that item.
The second policy change inside the NSPD 56 is on dual and thirdcountry nationals. In December, we said dual and third-country nationals from NATO, EU, Japan, Australia, New Zealand and Switzerland would no longer need to submit nondisclosure agreements on those individuals. That relieves a burden on industry, because from a national security and foreign policy perspective, we don’t have concerns about dual nationals from these countries.
The third policy shift was just published April 11 to clarify Section 17c of the Arms Export Control Act that solves the interior light, or commodity jurisdiction issue. We never sought to control lights, fasteners, widgets and wires on commercial aircraft. To clarify this, however, we created a fourpart test industry can use to determine something on a commercial aircraft is not subject to State’s jurisdiction.
Q. How long before the various agencies agree on dual-national policy?
A. The Commerce Department, the direct commercial sale and the Foreign Military Sale [FMS] systems treat them completely differently. We can sell someone a tank through the FMS process and we would never tell the government buying the tanks to divulge to us whether there are dual or thirdcountry nationals involved. But if we then sold that same country technology to service the tank through the direct commercial sale process, the country would need to list the dual- and third-country nationals on that project.
We are looking at clarifying how the U.S. Government treats dualand third-country nationals. Congress has a great interest in this area and, in the end, it may need to provide needed clarity.
Q. When will the treaties be ratified?
A. We would like the Senate to take up the treaties as soon as possible and every indication is that they will, but I don’t have a date.
At this point, we have briefed the staffs and I don’t sense opposition to the treaties. Our planning assumption is: If the Senate provides advice and consent, we would get the first export out under the treaties by mid-fall. We are working on what we can prior to ratification to get the processes in place that we would need to get that first export out.
Q. Some say arrangements to handle stealth, night vision, anti-tamper, communications security and aircraft engine technologies are not specific enough. Is greater clarity needed?
A. The Implementation Arrangements in both treaties allow for a list of items excluded by DoD from the treaty that we will continue to send to the U.K. and Australia under government-to-government agreement or licenses. About 75 percent of what’s on the U.S. Munitions List will be exportable under the treaties.
The concerns you are hearing in London or elsewhere is that the exclusion list is a negative list. The way we will address that is to come up with a positive list when we publish a Federal Register notice implementing the treaty that tells exporters exactly what they can export.
Q. Have personnel changes accelerated the reform process?
A. There has been a complete shift in the management of the arms transfer function of the State Department. You have me as the deputy assistant secretary, Bob Kovac came over from DoD to be the managing director and Kevin Maloney from DoD to be the head of licensing. So this is a wholesale change.
Q. The Pentagon has bought Italian transport and French tanker planes. Will treaties be extended to other allies like Italy and France?
A. The president chose to sign treaties with Australia and the United Kingdom to reflect the unique relationships with those two countries. This administration has told the Congress that it will not seek additional treaties.
There was a level of concern on the Hill with these treaties because they’re new commodities. We spent a lot of time explaining our rationale and how the process will work. Staffers understand the issues and have become more comfortable with the treaty concept over time. But if we did additional treaties I think their comfort would be called into question.
Q. What about the transfer of military equipment from Britain that includes technology cleared through the treaty?
A. If I want to export something to the U.K., first I have to determine if it’s an excluded technology, like stealth. If it’s not, then is it for a project under the scope of the treaty, for combined military operations like Iraq or Afghanistan, or an approved combined research and development project? Is the item for the unique end use of the U.K. or Australian militaries, or intended for the export market?
The treaty is not designed to address the latter. If a company wants to export those products, then it would have to go through the normal licensing process, as they would today.
Q. Your office can veto the export of foreign-made items that use controlled U.S. parts or technologies, which has led some firms, such as France’s Thales and Italy’s Alenia, to develop satellites free of American components for sale to China. Is that a concern?
A. We are monitoring the circumstances and analyzing what International Traffic in Arms Regulations (ITAR) items we may have authorized to such companies to make sure those items are in fact not being incorporated into ITAR-free products. We would certainly factor into any future licensing determination the activity of a foreign company in terms of licensing ITAR-free items to countries that may raise potential national security risks to the United States.
Q. Singapore and South Korea are interested in buying Global Hawk, but the export of such large and sophisticated UAVs is limited by the Missile Technology Control Regime that was intended to control cruise missile proliferation. What can be done to change that?
A. The administration is considering these questions internally, and I wouldn’t want to go beyond that.
Q. What’s your next priority, after the treaties?
A. Over the next month, we’re going to focus on coming up with a new commodity jurisdiction process and establishing interagency dispute mechanisms which will be the three deputy assistant secretaries from State, DoD and Commerce. The NSPD also calls for a self-financing mechanism for the directorate and we are putting together a proposal for the secretary of state to meet NSPD and growing license volume. You could do registration or license fees, or retention of penalties. Everyone now pays $1,750, even the top five defense manufacturers.
Source: U.S. State Department