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  Losing Market Share And Damaging National Security Due To Anachronistic Drone Policy

  Dave Deptula Contributor Adherence to an obsolescent approach to the international nuclear non-proliferation export guidelines of the Missile Technology Control Regime (MTCR) is hurting the United States (U.S.) both commercially and from a national security perspective. In a nutshell, the MTCR treats large drones as if they were nuclear missiles—which they are not. As a result, this self-imposed restriction not only limits the sale of large U.S. drones to our friends and allies but pushes them into the arms of foreign suppliers some of whom are potential adversaries. The result is a series of negative consequences for the U.S. When the Stockholm International Peace Research Institute released its annual report on global arms transfers earlier this year, it was a good news story for the U.S. From 2015-2019, the U.S. accounted for 36 percent of major global arms sales, a 23 percent increase in volume over the previous five-year period and 76 percent more than its next closest competitor—Russia. The dominant position the U.S. finds itself in is a testament to both the quality of U.S. defense equipment, which is typically accompanied by robust training, sustainment, and support packages, as well as the mutual desire of the U.S. and its partners and allies to develop and maintain strong defense relationships. However, one important segment of the defense market where this pattern does not hold are large military unmanned aerial vehicles (UAV). This is not due to a lack of capability—the U.S. remains the world's leader in UAV technology and expertise—nor a lack of demand as by 2029 the international market will account for over 50 percent of the over $10 billion projected to be spent annually on UAVs. Instead, the U.S. has hamstrung itself due to restrictive export policies that equate large UAVs to nuclear missiles. This mismatch between the definitions and controls imposed on UAVs and the reality of how they are actually employed has significantly harmed coalition operations, U.S. relationships with its partners and allies, and the U.S. defense industrial base. It is imperative that the U.S. modernize its UAV export policy. Currently, the MTCR governs the export of U.S. UAVs. Initially formed in 1987, the MTCR is a voluntary agreement intended to limit the proliferation of missiles capable of delivering nuclear weapons—and later weapons of mass destruction (WMD). The MTCR defines UAVs capable of delivering a 500-kilogram payload more than 300 kilometers one way as Category I systems, the transfer of which “are subject to an unconditional strong presumption of denial.” Although at the time the MTCR was negotiated no UAV exceeded the Category I thresholds, their envisioned use as delivery vehicles for WMD equivalent to cruise missiles precipitated their inclusion in the MTCR. However, since then the development of UAVs evolved as remotely piloted aircraft, not cruise missiles. Unfortunately, export policy has failed to keep pace, resulting in a situation where the export of UAVs is regulated under the same stringent regime as intercontinental ballistic missiles. The U.S. policy failure to adequately remedy this situation creates significant problems for the following reasons. First, current U.S. export policy prevents the U.S. from realizing the full potential of UAVs in coalition operations. Because current policy frequently results in the denial of export requests for U.S. UAVs by close partners and allies, these nations must either resort to indigenous production or to another foreign manufacturer to meet their military requirements. Under the best of circumstances, the result is a lower level of interoperability with U.S. forces than possible had they been able to acquire U.S. UAVs. This hampers the integration of partners that would enable the coalition to be much more effective. The current policy impedes the use of common UAVs critical for success in allied operations. Of greater concern is that much of the unmet demand by friends for U.S. military UAVs is now being fulfilled by China because of the MTCR restrictions. Integrating partners into coalition operations using Chinese UAVs creates significant security risks. This is because China maintains control of the systems necessary to operate their UAVs. This enables them to collect intelligence on coalition operations if allowed access to coalition networks. From the perspective of a U.S. commander, the risk these likely infiltrations pose to security is sufficient to exclude partners operating Chinese UAVs from participating in both U.S. led coalition operations and intelligence sharing agreements. Second, the U.S. denying UAV export requests from nations that are security partners fosters frustration, raises doubts about U.S. commitments, and drive partners to pursue security relationships with China. Jordan, Iraq, Saudi Arabia, and the United Arab Emirates provide recent examples of solid U.S. partners that have procured Chinese UAVs. Furthermore, these countries are then forced to rely on China for training, sustainment, intelligence processing, and other related services. China's willingness to integrate indigenous industry in joint ventures—another practice restricted by the MTCR—serves to further solidify the ties between China and the partnering nation. Absent a change in U.S. policy, China will continue to expand its UAV market share and associated influence into regions important to the U.S. Third, the associated U.S. loss of global market share of UAV sales weakens U.S. business and the U.S. defense industrial base. Domestic funding for certain UAVs already faced downward pressure in the most recent budget request amidst other modernization priorities. Looking ahead the enormous federal expenditures to address the COVID-19 pandemic and the associated economic downturn are likely to result in significant cuts to future U.S. defense budgets. Greater access to foreign markets would serve to diversify the customer base of U.S. manufacturers of large UAVs, helping to offset reduced revenue from domestic buyers and keeping commercial production lines. Unfortunately, current UAV export policy precludes this from happening. Declining production rates for large military UAVs threaten to not only to shrink the U.S. aerospace industrial base, but also to undermine its competitive edge. Lacking predictable cash flow and sufficient profit margins, companies that manage to remain in the market will become more reticent to invest significant funds into research and development. Furthermore, the MTCR prohibits co-development and co-production of UAVs, precluding U.S. drone companies from pooling resources and expertise with international partners. The danger is that the U.S. may squander its drone advantage just as international interest in procuring advanced, survivable, multi-mission UAVs ramps up. It would be a tremendous shame if the U.S. finds itself no longer in a leading position and must instead rely on others to develop cutting-edge UAV technologies. Although there is growing awareness of these problems, recent efforts to craft a more reasonable UAV export policy have largely fallen short. Rather than a fundamental shift in policy, the few positive steps taken have been stopgap measures involving workarounds—approving more Category I sales via direct commercial sales rather than foreign military sales—or maneuvering within the confines of the MTCR through attempts to modify UAV definitions such as adding a speed criteria. Instead, as is comprehensively laid out in the Mitchell Institute's most recent policy paper, what is needed is for the Congress to insert language into the 2021 National Defense Authorization Act that explicitly defines UAVs as combat aircraft and subject them to the same export considerations. This would effectively remove U.S. UAV export decisions from the MTCR guidelines. The U.S. has a proven process of adjudicating sales of the most advanced fighter aircraft in the world, including how to configure them to make sales mutually beneficial to the U.S. and its partners. The example of the F-35 is particularly pertinent because technologies approved for export on the F-35 would be restricted by the MCTR if applied to a UAV—the only difference being the pilot of the F-35 is in the aircraft whereas large UAVs are remotely piloted. Given both the high degree of commonality of combat aircraft and UAVs, as well as the proven success combat aircraft sales have in providing partners a formidable deterrent and warfighting capability, improving interoperability among coalition partners, and supporting both U.S. and partner industrial capacity, treating UAVs as combat aircraft for export policy offers the most sensible and effective solution. Change cannot come soon enough. The U.S. has a limited window to re-engage with partners with a stated interest in U.S. UAVs or who are experiencing buyer's remorse with regard to their Chinese UAV partnerships. It is therefore critical that the U.S. normalize its UAV export policy before China can consolidate its gains. The future of warfare increasingly depends on UAV technology. Exporting large U.S. UAVs is vital to effective coalition operations. For too long the MTCR has distorted the balance of national security and economic interests against the fear of nuclear and WMD proliferation. Acknowledging UAVs as what they are—aircraft, not missiles—will enhance U.S. security, improve commercial trade in a growing business sector while preserving the MTCR as an effective means to prevent the proliferation of missiles and their associated technologies. https://www.forbes.com/sites/davedeptula/2020/06/09/losing-market-share-and-damaging-national-security-due-to-anachronistic-drone-policy/#50ce76d51332