42 AVIATION WEEK & SPACE TECHNOLOGY/JANUARY 15-FEBRUARY 1, 2015 AviationWeek.com/awstN
o White House administration has been more efective in
reforming U.S. defense export controls or shepherding
change than Barack Obama’s. In just over four years, more
progress in this area has been achieved under his tenure than by
the previous four administrations in as many decades.But it all just might
be too little, too late.
“A lot of change has
occurred, which is re-
ally good,” Gibson Le-
Boeuf, vice president for
Washington relations at
Raytheon International,
said at a recent confer-
ence. “There’s still room
for more improvement,”
he added.
The irony that Wash-
ington has come so far
in improving defense
export controls, yet
has so far to go, quickly
emerges during any
discussion these days
about U.S.-based aerospace and de-
fense (A&D) companies selling abroad.
To be sure, industry does not want to
do anything to discourage ofcials and
lawmakers from continuing to make
changes to the outdated Cold War-era
licensing system.
Executives also cheer victories such
as the Senate’s 2010 ratification of
two defense trade treaties (DTT) that
President George W. Bush signed with
Australia and the U.K., which obviated
the majority of U.S. defense licensing.
In 2012 Congress also gave Obama
authority to loosen control of certain
commercial satellites and related
items, reversing what is widely consid-
ered a mistake lawmakers made in the
1990s. Above all, in 2010 Obama said
he would try to double U.S. exports in
five years and to bring licensing into
the 21st century.
There has been growth, but also adawning realization that exports are
no panacea. The Aerospace Industries
Association said 2014 aerospace ex-
ports did maintain their upward trend
of recent years, improving by nearly
$8.1 billion, with growth mainly in the
civil sector. Overall, the favorable bal-
ance of trade in aerospace products
was a $61.2 billion surplus.
But defense exports grew just 9.2%.
“Foreign sales will continue to be a key
area of focus for defense companies,
but defense export growth will not of-
set declines in domestic procurement
spending,” the trade group said last
December, referring to U.S. defense
budget cuts.
Meanwhile, the world of defense
exporting is changing rapidly, chal-
lenging the post-Cold War paradigm
of Western dominance. The Stockholm
International Peace Research Insti-
tute’s latest report on annual trendsMichael Bruno WashingtonDefensive
Exports
Despite real reforms, U.S. A&D exports are
slow to benefit as the world changes quickly
DEFENSE EXPORT TRENDSand data in worldwide arms produc-
tion and sales—excluding China, due
to a lack of data—shows that while
the top 10 largest arms-producing
and military services countries have
not changed, Russian and emerging
market-based companies are surging.
Indeed, in the 2013 rankings released
last month, Russian anti-aircraft weap-
ons maker Almaz-Antey became the
12th-largest arms producer and crept
closer to Sipri’s top 10, which otherwise
has been exclusively the domain of U.S.
or Western European
companies since the So-
viet Union dissolved. Last
year also saw the intro-
duction of a 10th Russian
arms company—commu-
nication and electronics
manufacturer Sozvez-
die—to the Sipri Top 100.
The number of Ameri-
can companies as a whole
dropped 4.5%, with the
number listed in the Sipri
Top 100 declining from
42 to 38, which the in-
stitute attributed to cor-
porate divestitures and
business portfolio reduc-
tions. French companies
boosted sales year-over-
year, while British companies stayed
at the same level. Italian and Spanish
companies’ sales continued to decline.
Worldwide, the shift in growth and
size continues to favor non-NATO
players, especially those in develop-
ing nations. Registering 15.5% of Top
100 arms sales for 2013, their share
is at its highest point in the history of
the institute’s post-Cold War rankings.
But overall, arms sales appear to have
peaked in 2010 and have dropped in
total, inflation-adjusted amounts since
then (see chart).
Back home, the U.S. industry has
been slow to utilize new exporting
tools and allowances due to unfamil-
iarity or confusion. Also, U.S. Foreign
Military Sales (FMS) appear to have
lost some luster, both because they
are too expensive and because poten-
tial customers are sufering their own
spending constraints, as in the West.5004003002001000
2002 2003 20042005 2006 2007 20082009 20102011 2012 2013Current U.S. $ Constant (2013) U.S. $U.S. $ billionsTotal Arms Sales of Companies
in the Sipri Top 100, 2002-13Source: Stockholm International Peace Research InstituteData For more on recent U.S.
aerospace exports and the Sipri Top
100 arms-producing companies, tap here
in the digital edition or go to
AviationWeek.com/DefenseExportTrends