In the May 2008 issue of National Defense magazine, respected industry analyst Sandra Erwin writes about the emerging competition between the U.S.-designed F-35 Lightning II Joint Strike Fighter (JSF) and a range of less capable but much cheaper alternatives in the international fighter aircraft market:
As was noted here, the United States needs a large production run for the JSF in order to amortize its astronomical development costs, and to that end has created a team of multinational partners to share the burden. But as the cost of the aircraft has increased rapidly over the past several years, a number of these partners, most notably Norway, have begun suffering a combination of sticker shock and buyer’s remorse, and are now searching for more affordable alternatives. As Reuben Johnson noted here, the Swedish JAS.39 is very much in the running, but so are the EADS Eurofighter Typhoon, the Dassault Rafael, the Boeing FA-18E/F Super Hornet, as well as different models of the Russian MiG-29 and the Su-30. As Erwin’s article notes, this is a cause of great concern within the USAF, because without substantial foreign sales, the United States cannot afford to buy the JSF in the numbers required to maintain fighter strength at a reasonable level as the F-15, F-16, and older models of the FA-18 begin to retire. Cost is just one part of the equation. Many potential foreign buyers are deeply concerned over the export control and technology transfer restrictions placed on various aspects of the JSF, particularly those concerned with low-observable (stealth) and counter low-observable systems. In many cases, the United States will only sell this technology in the form of a sealed “black box,” which the user country cannot open either for maintenance or for upgrades; this places the user country at the mercy of the United States, which can withhold supplies of critical spare parts. In other instances, the United States may provide less capable versions of critical systems, so that the buyer gets a second-class bird for a first class price. The United States also places restrictions on third party sales, meaning that even JSF partners cannot sell JSF-derived technologies without first obtaining an export license from the United States. While this helps ensure that our “family jewels” do not fall into the wrong hands, it also places European companies at a competitive disadvantage against both the United States (which can deny the necessary licenses) and other companies that do not use U.S.-derived components. Licenses are covered under the U.S. International Traffic in Arms Regulations (ITAR), which are greatly resented in Europe because of the limits it puts on the sale of technology and because of the bureaucratic hassles involved in getting a license (which is needed for anything beyond the most cursory of discussions about a system or technology).
Already in Europe there is a strong sentiment to go “ITAR-free,” even if this means spending more money to get slightly less capability. In some cases, this is already happening: when the U.S. denied European companies a license to purchase high-end transmitter-receiver (T/R) modules for active electronic array radars, several European companies developed their own substitutes. And while American industry reps will tell you that these do not compare with their U.S. counterparts in either performance or cost, to Europeans, they are “good enough,” and well worth the price if it means getting out from under U.S. export controls. The reason is simple: while U.S companies depend on export sales for perhaps a third of their revenues, European companies get anywhere from a half to three-quarters of their revenues from “rest-of-the-world” sales, where they go head-to-head against American companies for everything from fighter aircraft to combat vehicles to small arms. The ability to sell to third parties without U.S.-controlled ITAR strings attached will give European companies a competitive edge over U.S. companies, particularly for aircraft and other big-ticket items. And, as MGEN Davis, the PEO for the Joint Strike Fighter said, “What keeps me awake at night is how these airplanes are marketed”. It may be time for the United States to consider a complete overhaul of its export control regime to make it more consistent with U.S. strategy and industrial policy. But we have been down this road many times. About every seven or eight years, or so, we look around and say, “Someone should fix ITAR,” and everyone agrees, but somehow nothing gets done. But we are fast approaching a point where, unless something is done, the whole matter will become irrelevant–and U.S. security will suffer as a result. Not only will the U.S. defense industry lose part of its competitive edge to Europe, Russia, China and even India, but the emergence of ITAR-free equivalents of U.S. systems will remove the ability of the United States to prevent the proliferation of advanced military technologies to potential adversaries.
