Trade War

Since U.S. President Barack Obama has taken office, the debate between economic protectionism and free trade has reemerged with a vengeance. Just this week, British Prime Minister Gordon Brown dinged the new president’s allies in Congress for inserting a controversial Buy American provision in the stimulus bill passed in February.

The most important strategic decisions over trade that Obama will face will not be about French cheese or the Chinese yuan, however, but over the dozens of countries around the world that, during the past few decades, have become critical in supplying the U.S. military with the latest technologies and best equipment. These foreign suppliers are significant, and increasingly vital, contributors to America’s military superiority.

Given that the purpose of military procurement is to ensure competitive advantage over other countries’ technological arsenals, the idea of depending on foreign sources for military equipment might seem ill-advised, even dangerous. But in fact, virtually every weapons system used by the U.S. military today contains components that were manufactured or designed somewhere else.

Take, for example, the Army’s new mine-resistant, ambush-protected (MRAP) vehicles. Designed to protect soldiers in Afghanistan and Iraq, they have a V-shaped hull that was originally developed and refined in South Africa, along with armor that was designed in Israel, robust axles from Europe, and electronics from Asia.

The Medium Extended Air Defense System (MEADS) is a joint development and production program between the United States, Germany, and Italy; the United States’ Advanced Medium-Range Air-to-Air Missile (AMRAAM) is the result of the efforts of more than 20 countries and is manufactured using 14 foreign subcontractors. Even Obama’s new helicopter will be based on an Italian design and partially produced in Britain. The list goes on and on.

Of course, critics argue that these arrangements are incredibly dangerous. After all, couldn’t the U.S. weapons supply be cut off during wartime if the country were too reliant on foreign parts? Most of these foreign sources, however, are from NATO nations or other countries with which the United States has had enduring military and commercial relationships. For example, despite very public opposition in some of these countries to U.S. actions in Afghanistan or Iraq, at no time did foreign suppliers (including 20 German and two French suppliers) restrict the provision or sale of components.

Skeptics also worry about Trojan horses built into foreign-supplied systems, particularly in the case of software. But this potential threat can be addressed through extensive and rigorous testing and reverse engineering, just as occurs in the financial and medical communities. Still others raise serious and legitimate concerns about military technology leaking into the hands of rogue regimes or terrorists or being sold to third parties without U.S. knowledge. These are certainly excellent arguments for international arms-control treaties. But there’s no reason why such treaties need preclude legal arms trade among allies, along with mutually agreed-to verification techniques.

More commonly, opponents emphasize the potential loss of jobs that might occur as a result of buying equipment from offshore firms. This was the argument critics in the U.S. Congress fell back on in March 2008 when the U.S. Air Force awarded a contract to build a midair refueling tanker to Northrop Grumman over rival Boeing.

What made Northrop’s bid controversial was that it planned to convert commercial aircraft built by European conglomerate Airbus for military use. Parts would be built in Europe and then shipped to the United States for assembly in Alabama. The response from Congress was as predictable as it was wrongheaded. Members from both parties swiftly denounced the decision to reward the lucrative contract to a foreign firm.

We should have an American tanker built by an American company with American workers, said U.S. Rep. Todd Tiahrt of Kansas during a debate on the deal. I cannot believe we would create French jobs in place of Kansas jobs.

The Defense Department is not a social welfare organization, and its sole responsibility is to supply U.S. war fighters with the best equipment at the best price. Luckily, though, these two goals aren’t mutually exclusive: Military globalization is in fact a blessing for Americans.

The United States is still the world’s largest military customer, and it’s in the interest of international weapons manufacturers to do business where the buyers are. In the past decade, a number of major international firms have set up shop in the United States. In fact, the Northrop deal would have created tens of thousands of U.S. jobs — though admittedly not in Tiahrt’s district, where Boeing happens to have a plant.

But the arguments for military globalization aren’t just economic. U.S. national security policy, for at least the past five decades, has been based upon technological superiority. But it’s no longer the case that the best military technology is always American (e.g., flat screens from Taiwan or optics from Germany). Therefore, for the United States to gain the best possible technologies, it often must turn to foreign sources.

It is also inconceivable that the United States would be involved in any future military operation without being in some form of international coalition. This is primarily for geopolitical reasons (rather than simply military ones), but its importance cannot be underestimated. When operating in a coalition environment, the United States must be able to operate interchangeably with its allies, and it must have the best possible equipment.

Despite the benefits that military globalization has already brought, Congress continues to pass laws blocking its expansion. And these laws can sometimes be directly detrimental to military operations. In 1998, export controls enforced by the State Department held up the production of a U.S. fighter plane for seven months while a U.S. company waited for an export license to supply technical data to a Dutch company that was building parts for it. These controls even prompted one major German defense contractor to instruct its employees to avoid U.S. defense goods at all costs.

The 1993 Buy American Act requires that 51 percent of all purchases by the Pentagon be produced in the United States. This often results in foreign-designed weapons systems being transferred to the United States for production at a significant increase in cost to the American taxpayer. Congress has occasionally flirted with expanding the act to cover all military purchases (in fact, in 2004, the House of Representatives passed a law that all parts of all weapon systems must be made in the U.S., on U.S. machine tools). This requirement would have had disastrous consequences for military procurement and in some cases would have required the government to create entirely new (subsidized) industries. (Fortunately, the Senate did not concur, so it did not become law.)

Deciding to wait on resolution of the Air Force tanker controversy, Defense Secretary Robert Gates essentially shelved the issue for the next administration to decide. It will be up to Obama — who attacked the deal on the campaign trail — to resolve this matter and the issue of military globalization more generally. How the United States handles the globalization of the defense supply chain will be one of the key, but unheralded military challenges of the next administration. It is critical that Obama recognize the benefits of globalization and move toward policies that ease military cooperation between trusted allies, rather than stifling them. He will likely quickly learn that the integration of foreign suppliers into the U.S. supply chain has already progressed to the point where politicians couldn’t reverse it even if they wanted to.

But there are still important decisions to be made in the coming years. For example, as the United States fights alongside its NATO allies in Afghanistan, all countries will need the best possible equipment, not just equipment designed and built in their respective countries. (And, the equipment must be capable of interoperating in order to gain maximum advantage against a common enemy.) As usual, this is already happening. Because the Department of Defense has not been heavily investing in advanced helicopter technology, when the Air Force recently needed a new combat search-and-rescue helicopter, the department selected a European design as the best available.

The United States must face the fact that it no longer has a monopoly on the world’s best military technology. America’s path toward future stability involves cooperating with allies and taking advantage of the best they have to offer, not cutting itself off and watching as its military superiority slips away.