As prepared

Thank you, Mr. Melcher, for the wonderful introduction and thanks to AIA for the opportunity to speak with you all this evening.

We very much value the role that the defense industry, and particularly the aerospace industry, plays in enhancing American prosperity and creating American jobs, and we’re always looking to work collaboratively in order to achieve our shared objectives. The State Department understands that having a strong defense industrial base and encouraging domestic innovation is key to U.S. interests. We consistently pursue these goals, together with you, bearing in mind the need for the United States to maintain its technological edge, promote efficient defense relationships with our partners and allies, and support the U.S. defense industry’s increasing requirement to leverage overseas markets.

I’m glad to have the chance to share the State Department’s perspective on how Security Assistance can be used to strengthen partnerships and advance U.S. foreign policy and national security objectives around the world. I look forward to your questions and our discussion at the conclusion of my remarks, and in service of that, I’ll keep my remarks relatively brief.

In this Administration, the Department of State is continuing to address these challenges by promoting continued modernization of our defense export system, frequently engaging with U.S. industry, and coordinating with other key U.S. government players to ensure a whole-of-government approach to defense trade.

Perhaps most saliently, the State Department has been working with its interagency partners on an arms transfer initiative that covers a wide array of defense trade and security cooperation issues. We are nearing the point where we will be able to talk about the initiative with our Congressional and industry colleagues to gain your feedback and perspectives. Your input on the way forward is vitally important to us. We recognize that we must always evolve our policies and processes to meet the challenges of today and prepare ourselves for what is over the horizon. To that end, we hope to focus on ways we can ensure the health of the defense industrial base and enhance our competitiveness abroad. We are developing this initiative because the Administration believes that strengthening the defense capabilities of U.S. allies bolsters our ability to protect the United States by being a force multiplier for the U.S. warfighter, and ultimately benefits U.S. industry by driving new innovation and creating high quality American jobs.

We are also committed to continuing the reform of our export control regime that is so critical to how all of you do your business. We have come a long way since the former National Security Advisor addressed the Senate Aerospace Caucus in mid-2010 and provided the first public details on the reform initiative. We have more ideas to build on our successes. Where there are bureaucratic efficiencies, we will gain them; where there are paperwork stovepipes, we will reduce them; and where there is unnecessary red tape, we will cut it.

The past six years have already seen remarkable progress in this regard, and this Administration is committed to ensuring that all sectors of U.S. industry gain an equal footing in the export market – and a leg up over international competition. To that end, we have already completed an initial review of a comprehensive rewrite of the ITAR which has not been done since 1984, with the goal of making the regulations more clear and relevant. We have already seen a 55 percent drop in total ITAR licensing, and anticipate a significant part of an additional 30 percent of our current total licensing volume to move to the Commerce Department’s jurisdiction once we complete the regulatory process for the last three USML categories. I am pleased to report that those regulations are moving forward for publication. While the review of exports for national security purposes remains an important part of our foreign policy, we intend to pursue this goal with a renewed understanding of the needs of American industry. We recognize that American industry’s time is best spent in manufacturing and promoting its products, not in understanding the legalese of the regulations.

There remains the outstanding issue from the previous export control reform initiative as to whether the Administration should seek legislation to create a single licensing agency. While this matter is still being discussed, I can say that we remain deeply committed to reducing the regulatory burden, as appropriate, while adequately protecting our technologies and U.S. industry’s competitive advantage.

The State Department, together with its interagency partners, is also focused on improving coordination of U.S. government participation at international trade shows, so that we can more effectively communicate to industry and partners our policies, goals, and priorities. Notably, my bureau of Political Military Affairs at the State Department will be present, together with our DoD colleagues, at the Dubai International Aerospace Exhibition in November, as well as at the Unmanned Systems Exhibition and Conference in the UAE in February. We are also increasing our coordination with the Departments of Defense, Commerce, and other agencies so that we have a whole of government approach to defense trade and trade promotion.

Your inputs on these and other endeavors are absolutely vital to us. We need to hear from you on an ongoing basis, and I believe that you can also benefit from the policy insights we provide. Industry has generously hosted frequent engagements to foster a free-flowing dialogue with the interagency on defense trade issues. For our part, PM has also hosted quarterly government-industry discussions, but I think the opportunity is there for even more frequent interaction, particularly as we contemplate the kinds of initiatives I mentioned earlier. I can’t encourage you strongly enough to take advantage of opportunities for advocacy through these engagements, and of course my door is also always open to listen to your individual comments and concerns.

Similarly, I say to those Members of Congress, and Congressional staff who join us tonight: we are on one team. These companies are your constituents: they are fundamental to our national defense and assistance abroad. We look forward to working with you, and to gaining your support, for continued improvements to our export controls that will place our defense industrial base at a competitive advantage for generations to follow. At a time when the American public is looking to us to bolster U.S. national security, create economic opportunity, broaden U.S. markets in essential regions overseas, and achieve long-lasting growth, government and industry must work harder than ever before to be both strategic and fully collaborative in their approach to defense sales and arms transfers. There is no question that the State Department views this effort with the utmost seriousness. I look forward to hearing from you tonight, but also to keep up the conversation as we move forward.

U.S. Department of State

The Lessons of 1989: Freedom and Our Future