US & UK try to settle defence trade treaty differences

U.K. and U.S. negotiators will meet in Washington this week to untangle two issues snarling a defense trade treaty: what companies will be allowed to avoid certain export licenses, and how to control the access of non-British nationals to sensitive information.

Paul Lincoln, the Cabinet Office head of defense and security and the official leading the British negotiating team, revealed the problem areas when he appeared before the Parliamentary Defence Committee Nov. 21 to discuss progress on the treaty negotiations.

These hurdles will come as no surprise. Agreeing which companies can get their hands on U.S. defense secrets without applying for an export license, and who in Britain will be cleared to see them, was always going to be a thorny problem if the U.S. Senate wasn’t to be scared into rejecting the treaty.

The British want as inclusive a list as possible, while the U.S. position has been for a more restrictive approach.

Depending on the rules adopted, some of Britain’s many large, foreign-owned defense firms could be left off the list of approved companies.

Committee Chairman James Arbuthnot said it was a fundamental problem. Naming companies such as EADS, Thales and Finmeccanica, he pointed out that huge portions of the British industry were now foreign-owned and nobody knew whether they would be in or out of the arrangement.

Lincoln said that Britain’s current security arrangements, known as List X, would be the baseline standard for entry by companies here.

“These already take account of foreign ownership, control and influence within companies,” he said.

Britain’s new defense procurement minister, Baroness Taylor, said the issue was far more complex than simply the percentage of foreign ownership. The system that will operate will be List X with “additional requirements,” she said.

An EADS spokesman said the company is “watching the situation with interest. We hope the concerns of other defense companies like EADS, with significant defense interests in the U.K. and the U.S., are taken into consideration.”

U.S. President George W. Bush and then-British Prime Minister Tony Blair signed the U.K.-U.S. Defense Trade Co-operation Treaty in June to ease licensing restrictions impeding exports of high-tech equipment between the two allies.

Since then, diplomats from both sides have been immersed in negotiations to produce a treaty-implementation plan.

British and U.S. officials met in London the week of Nov. 12, and a reciprocal gathering gets under way in Washington this week. The two sides are racing to beat an end-of-November deadline to set a Memorandum Of Understanding (MOU) on working arrangements required to implement the treaty.

That deadline was established so the U.S. administration had a chance to win Senate approval of the treaty before the Christmas recess. The treaty details may go to the Senate before the recess, but hopes that it could be approved this year have evaporated.

Taylor said that while she was optimistic the problems would be overcome, there was no “opportunity for ratification in the U.S. [Senate] this side of Christmas.”

The Senate will return in mid-January. The treaty then has a small window of opportunity to get approved before work on the defense budget and the U.S. presidential election process starts to divert Senate attention.

Some observers, including British defense consultant Alex Ashbourne, reckon it could be too late already.

“I would be extremely surprised if ratification comes as quickly as the two governments would like,” she said. “This issue doesn’t have a high priority on Capitol Hill, and the attention of the Senate is already being diverted by the presidential election in November 2008. If it is not ratified quickly, it could suffer the same fate as the ITAR waiver, and industry will manage as they do today.”

A Ministry of Defence spokesman said Nov 23 that the plan is remains “to finalize the treaty details by the end of November.”

A spokesman at the U.S. State Department’s Bureau of Political-Military Affairs was optimistic but wouldn’t say the deal could be squared away by the end of the week.

“We have had very positive negotiations with the representatives of the U.K. government, and while a few issues remain, we hope to resolve them and reach final agreement on the implementation arrangements shortly,” he said. “Since these negotiations are still in progress, we cannot comment on the specific issues that remain to be resolved. Once agreement is reached, we will forward the implementation arrangements to the Senate as soon as possible.”

The British optimism appears to tally with suggestions from government sources here that the two sides nearly wrapped up the details on the two outstanding issues during their London meetings.

A U.S. defense trade consultant following the treaty developments said, “The goal in Washington was that implementing agreements were to be done by end of November, so there is a big rush of meetings with the U.S. and the Brits and the U.S. and the Australians.

“I don’t know if they will make it,” he said of the Nov. 30 deadline.

“There is basic agreement about what everyone wants to happen,” the consultant said. What they’re “haggling over” now, he said, is how to make it happen in such a way that the U.S. Congress won’t think safeguards on U.S. weapons and technology are being dismantled.

From the U.S. perspective, the major questions have been settled.

“There are a whole lot of nuisance things — not big issues, procedural things that have to be resolved,” the consultant said. “It’s grunt work for staffers.”

As far as which British companies will be allowed under the treaty to trade without export licenses, “The Brits want this to be as all-encompassing as possible,” he said. “The recalcitrants on the U.S. side want it to be a small list. They’re haggling over the criteria.”

Australia is involved in separate treaty negotiations with the United States. Both of Washington’s allies were previously involved with the U.S. administration in similar attempts to overcome the lengthy U.S. defense export licensing arrangements.

The ITAR Waiver agreements were blocked by the House of Representatives. The treaty approach allows the U.S. government to bypass the House and go straight to the Senate for approval.

Source: A. Chuter, W. Matthews - DefenseNews

Related Defence Industry News

• 15 Oct 2007 - Defence Committee inquiry into the UK-US Defence Trade Cooperation Treaty
• 13 Jul 2007 - Update: US & UK Defense Trade Cooperation Treaty
• 22 Jun 2007 - US & UK sign treaty on defence co-operation

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