The best term to describe arms export reforms, much touted by the Obama administration and some hopeful membersof Congress, is slow. Irrelevant to this century might be better.

The nature of the arms business has changed so much from the late 20th century because of the growth in global manufacturing that debating which widgets should be on a munitions list (even this nomenclature suggests the problem) is really out of phase with structural shifts in evolving global arms production.

In shaping a new regime for the control of defense exports, the reality of working with allies in a global supply chain needs to be prioritized, rather than debating which widgets they are “allowed” to get, which probably came from them in the first place.

A key problem in the United States is that the period since the collapse of the Soviet Union created an anomaly: the US’s main competitor had collapsed, leaving the U.S. with a huge cold war arsenal which it could leverage for its own use and for exports. Even though the legacy of 20th century approaches remains dominant – platforms are the focus, not capabilities – the stockpiles have dwindled and are not going to be replaced any time soon.

As the U.S. draws down its defense investments and sequestration makes it difficult to prioritize investments, the major US companies are looking to global exports as a key source of revenue and profits. One can not go to a major air show without senior company executives claiming significant growth in the international market as one way for them to deal with the uncertainties of DOD investments and the absence of strategy.

Sadly, foreign customers are just not that interested U.S. equipment as end items, especially when faced with the necessity to deal with ITAR and other regulations breaking down every component inside those end items. The kinds of allies working with the United States, whether in Europe, Asia, the Middle East or Latin America, expect to participate in the production process and to part of the overall evolution of the product. They expect to be part of the production cycle and to benefit industrially from buying any U.S. products.

Arms sales are no longer about things as end products. They are about participation in processes to build 21^st century systems.

Arms importers have such expectations for several reasons.

First, American companies simply do not dominate the global landscape the way they did 30 years ago or even 10 years ago. There are significant global players in Europe and Asia, which have emerged or are emerging to shape new products and processes.

Second, there are global competitors, such as China, which are generating technology and global reach and see the global market as a key area within which to shape partnerships for the long term.

Third, new industrial players such as Embraer and companies in India will over time become more significant players in shaping the production processes and products for global exports.

The U.S. is not unique in the way it once was in terms of production or capabilities. Our strengths — what makes us unique in the international marketplace — is the nature of the U.S. military and its global experience and reach. This assetis fundamental to our success if the U.S. hopes to play a key role in working with allies in shaping new military capabilities, and amortizing the costs of defense production.

But this will be done so in the face of 21st century production processes. In this model, prime contractors are responsible for development and delivery of final product, but do so by sitting on top of global supply chains. The global suppliers are just that and they are found in commercial as well as military domains. Many of their parts are inherently dual use — used by both the military and commercial entities.

For example, look at the cases of the 787, the A350 and the F-35.They are all quite similar in that the primes are the focal point of a significant global effort to shape supply chains which enable the delivery of new and capable products. Controls of end products or components on a munitions list simply ignores the reality of global supply chains.

The F-35 program has been built on a number of de facto reforms using a truly global approach and could be used as an important element to shape further reforms. One of the most interesting and surprising things about the F-35 debate is how rarely the role of our international partners and the importance of the program’s global production aspect is mentioned. It is as if the U.S. can debate its own defense future regardless of the allied commitments and engagement in the production of the F-35, which is underway.

There are a number of new products on the market, which are as good or better than US products — A330 tankers and A400Ms or FREMM frigates come quickly to mind. But the real point is not simply that there are alternatives, but that the production processes themselves are changing.

A key example of this change is South Korea, an important partner of the United States and Europe in shaping new defense capabilities.

Look at how South Korean technology has helped the U.S. build a more cost effective and capable logistics support ship. I visited the USNS Montford Point and spoke with the president of the shipyard building the ship. Frederick Harris of NASSCO highlighted the processes followed by the Asian yards, and their use of a tight planning and design process prior to building any ship.

He told a story about a meeting he had in South Korea with an American congressman in attendance. The shipbuilder was asked how many ships he had built that year and his answer was something on the order of more than 270. The congressman asked: How did you get that good?

“The South Korean shipbuilder paused and then answered: ‘We learned from the U.S. during World War II in building the Liberty Ships as manufactured products. We started there and have been working to improve on that model.'”

According to Harris, South Korean yards have contributed significantly to the design and production of the ship. One key example he gave was with regard to a technology transfer from South Korea to the US.

“The deck is one-and-three-quarters inches of steel. If NASSCO had relied on US methods, we would need multiple passes to build this steel plate on the deck. We called Hyundai on the phone and said: what do you do? One pass. Will you share that with us? Yes. We’ll share it with you.

“They shared it all with us, and it’s a process that we have here where you put powdered metal in the joint, it’s actually broken up pieces of weld material. And you autonomously weld, and you fuse all that together. And you build a crown when you put that material in. And it really is fantastic.”

“The process leads to very little, if any, weld rejects. The issue with one pass for us was we were seeing some weld reject. And we don’t want weld reject. But the Koreans, used a two-pass system. And their joint design was very different than our joint design. We quickly qualified the joint design to the USN spec requirements.”

Harris highlighted throughout the interview the importance of the partnership for improving the design and manufacturing process and making it a more exacting effort to drive out cost and to enhance manufacturing performance.

A second example is the partnership between Eurocopter and South Korea in building a new version of the Super Puma being built in South Korea that will be available for global export. According to Norbert Duclot, the head of Eurocopter in Asia:

“In 2006 we signed an agreement with KAI which has led to the development of the Surion helicopter for the Republic of Korea Army Aviation (ROKAA). The helicopter first went into service this year.The South Koreans are planning to acquire 245 of these helicopters and to derive several versions of the helicopter.

“It really is a Korean helicopter. One needs to realize that about 80% of the helicopter has been redesigned by the South Koreans; it is not simply license production for it is a newly designed helicopter.

“And we have an agreement to export this helicopter with them to selected markets. This is not a problem for us for the helicopter has no equivalent in the Eurocopter line. It is a new build 8.5-ton helicopter.

“The South Koreans and Japanese are really at the top of the game globally in terms of production technologies and techniques. Wehave advantages currently in design and having mature technologies available to the market place; but really the South Koreans and Japanese have much to teach the world in terms of production technologies and approaches.”

These two examples highlight the nature of the 21^st century global production process; a process which clearly is out of sync with our current Munitions List mentality.

New regulations passed by our allies require a shift to the recognition of the production process approach. For example, the European Union requires direct offsets in defense, not indirect offsets in defense as part of any arms deal going forward. This means that if the old F-16 model were being relied on rather than the new global production F-35 model, the U.S. generated aircraft would not be in play.

The new approach is going to generate changes for which a backward-looking arms control process simply is not prepared. Take the example of new weapons for the F-35.

A key aspect of the F-35 program is a re-shaping of the weapons market. Now allies who are on the aircraft for their ‘national” purposes are part of the global market.

Even though the U.S. has been the F-35’s core architect for the aircraft, building the fleet will not be solely and or even perhaps primarily American. A diverse group of global weapon suppliers – European, Israeli, and Asian – will seek to integrate their products onto the F-35.

There are two examples already in play of how allies can work with the F-35 to weaponize the aircraft to the benefit of the entire fleet. The first example is the inclusion of a Norwegian missileon the F-35. For Norway, a key element of the decision to buy the F-35 decision was our acceptance of integration of a new Kongsberg missile onto the F-35.

Through the development of the Naval Strike Missile (NSM), the Norwegian Armed Forces has established Kongsberg and other Norwegian industry in the top tier as a supplier of long-range, precision strike missiles that will meet military requirements in a 20 to 30-year perspective.

Historically, a Norwegian selection of an aircraft and a decision to integrate a missile on that aircraft would be largely for Norway or whoever else chose that aircraft and the series variant of that aircraft. This would not likely be a large natural market.

With the F-35 the situation is totally different.

The F-35A to be purchased by Norway has the same software as every other global F-35, and so integration on the Norwegian F-35 provides an instant global marketplace for Kongsberg. And the international team marketing the aircraft – is de facto – working for Kongsberg as well.

It is very likely, for example, that Asian partners in the F-35 will find this capability to be extremely interesting and important. And so Kongsberg’s global reach becomes embedded in the F-35’s global reach.

The second example is the development of the Meteor missile by the European consortium MBDA Systems. The new Meteor missile is a representative of a new generation of air combat missiles for a wide gamut of new air systems. It can be fitted on the F-35, the Eurofighter, Rafale, Gripen and other 21st century aircraft.

The US needs to have a 21^st century arms export process, which recognizes the reality of global supply chains. Allies expect to participate in the evolution of capabilities, and not simply by parts on a Munitions List.