On January 15, 2014, the White House released a revised version of the United States Conventional Arms Transfer Policy (the New Policy) as Presidential Policy Directive (PPD)-27, along with an accompanying fact sheet.  The New Policy sets out the framework for US Government decisions to approve exports of arms, dual-use items and related technologies and services, under the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR), the Foreign Assistance Act (FAA), the annual national defense authorization acts, and other export controls and security assistance laws and regulations.  The Clinton Administration issued the previous version, Presidential Decision Directive (PDD)-34, dated February 17, 1995 (the Former Policy), prior to the establishment of the Wassenaar Arrangement on conventional arms and dual-use technologies.  The New Policy keeps unchanged the core principles of the Former Policy; however, it contains updated language and a new focus on more current foreign policy issues such as human rights, homeland security, counter-terrorism, transnational organized crime, and nonproliferation of weapons of mass destruction.  As US defense spending diminishes and foreign purchases of US defense articles continue to increase, the New Policy should be of considerable interest to the US defense industrial base as a way to inform their global marketing and sales strategies. 

The New Policy flows from the changes that have occurred over the past two decades in the US arms export industry.  When the US Government released the Former Policy, US arms sales amounted to approximately $13 billion per year and were expected to remain flat.[1]  Moreover, the United States made a significant percentage of its sales to NATO countries, Asian partners, and several countries in the Middle East.[2]  Over the past decade, international defense trade has shifted.  The Arab states of the Gulf Cooperation Council (GCC) and Iraq now constitute some of the largest customers for the US defense industry.[3]  With that expansion in the breadth of the market, the annual value of US conventional arms exports has increased significantly.  In 2012, the US Foreign Military Sales (FMS) program alone handled transactions worth $69.1 billion, of which $29 billion went to Saudi Arabia.[4]  Before 2006, FMS levels were generally between $10 billion and $13 billion per year.[5]  With the rapid expansion of arms exports into the Middle East and other less stable regions, the US Government faces more complex political considerations than it did when a larger proportion of its sales were to Europe, Israel, Japan, South Korea, and Turkey.  For example, allegations of human rights abuses in Egypt, the GCC countries, and Iraq have in certain circumstances resulted in congressional opposition to US arms sales in that region.

The New Policy retains the core balancing principle of the Former Policy, weighing 1) the need to support legitimate transfers that meet the security needs of the United States and its friends and allies against 2) the importance of restraining transfers that may be destabilizing or threatening to US national security interests or to regional peace and security.[6]  The New Policy also endorses the same overarching principle that the US Government views conventional arms transfers as a legitimate instrument of foreign policy that deserves government support in the right circumstances.

The New Policy expands upon the framework of the Former Policy to include additional political considerations and new goals.  On the side of supporting beneficial transfers, the new goals include promoting cooperative counterterrorism, critical infrastructure protection, and other homeland security priorities, and combating transnational organized crime and related threats.  On the side of restraint, the New Policy seeks to support democratic governance and related foreign policy objectives and ensure that arms transfers do not contribute to human rights violations or violations of international humanitarian law.  Those restraint principles are not entirely new, but they are somewhat broader and are given more prominent treatment in the New Policy.  The New Policy also specifically references technical data and defense services as means of arms transfers, which clarifies and broadens its scope.

The New Policy also adds decision-making criteria that reflect a more current picture of issues of concern in US foreign policy.  Notably, it requires consideration of the likelihood that the recipient or a subsequent transferee would use the arms to violate human rights or international humanitarian law or otherwise identify the United States with such violations of international norms.  In a probable reference to China, it includes factors such as the risk that transfers involving power projection, anti-access or area denial capabilities may impact regional stability or contribute to an arms race.  In recognition of the recent political instability in certain US arms export markets, particularly in the Middle East, it also lists the “risk that significant change in the political or security situation of the recipient country could lead to inappropriate end-use or transfer of defense articles.”  The New Policy drives home its new and broader focus by stating that the United States will consider the exercise of restraint when transfers raise concerns about serious acts of gender-based violence and violence against women and children.

The expanded list of factors laid out in the New Policy is a response to the more complicated landscape of the US arms export industry that has taken shape over the past two decades and the increasing geographical and political diversity of the key arms export markets. However, the New Policy does not represent a significant shift in current US conventional arms transfer policy.  The United States has already been considering human rights, democratic governance, and other political issues as factors in arms transfer deliberations.  For example, last year the US Government announced a hold on deliveries of certain military systems and cash assistance to Egypt,[7] which for many years had been the second largest recipient of US Foreign Military Financing (FMF), after Israel.[8]

Some in the defense industry have expressed concern that the New Policy, particularly the principle of restraint, may lead to slower decision-making or a tendency to err on the side of disapproving controversial transfers.[9]  However, as discussed above, the Former Policy also set out a principle of restraint, albeit in a somewhat narrower context.  Indeed, the spokeswoman of the Defense Security Cooperation Agency (DSCA) said the New Policy “is not a change of direction, but rather an update to ensure that doctrine reflects current practice”.[10]  To the extent the defense industry does see a slowdown in US Government decision-making regarding arms transfers, that outcome is more likely a result of ongoing political developments in the export markets and in the United States, rather than a result of the New Policy itself.