"U.S. Industry Loses Big in India: Is ITAR to Blame?"National Defense Magazine
Larry Christensen discusses India's decision to exclude U.S. defense companies from its $11 billion competition for a new fighter jet, saying he believes the decision will have lasting implications for U.S. industry. Although he has not seen any proof that India's choice was influenced by ITAR, the International Traffic in Arms Regulations that restrict exports of sensitive U.S. technology, the fact that an emerging power such as India would snub U.S. advanced weaponry offers further evidence that the current export control system — which dates back to the Cold War — has outlived its effectiveness, Christensen says.
"The U.S. government cannot repeal the laws of economics," he says. As the U.S. denies access to some of its best technology, it leaves a market void that, sooner or later, another country will fill. "When that happens, the U.S. export control policy of denial, or policy of heavy restrictions, become ineffective" for the purposes of barring potential enemies access to advanced weaponry, he says. It is conceivable that India concluded that U.S. restrictions on technology sharing are not worth the hassle, Christensen suggests. Although the United States wanted India to buy its fighter jets, it was "putting strings on those sales" that would have curtailed India's ability to upgrade components, software or sensors, or collaborate with other countries, he says. If India had picked a U.S. aircraft, ITAR would have "restricted them in their ability to move forward with that platform."
On a smaller scale, the same problem affects U.S. suppliers of less flashy products such as surveillance, law-enforcement and border protection technology, says Christensen. "I know small firms that feel the pain of commercial customers saying that they like the U.S. product but they can't live with the restrictions and the overhead that goes with ITAR controls." The consequences for U.S. competitiveness are significant, he says. "The market is changing. Other countries are developing good technology." The time has passed when only the U.S., U.K., France or Germany were viable supplies of advanced hardware, he adds. "Technology is now available from Russia, China and Israel, countries that tend to place fewer restrictions" on transfers.
Christensen points out that the Obama administration is taking meaningful steps to reforming ITAR to boost U.S. industry. "I believe that there is significant movement," he says. Hundreds of government officials currently are busy redrafting regulations," he says. "It's a long arduous task, and I'm glad they're taking the time to do it right."