CONVENTIONAL ARMS TRADE
The Department of Defense today released a study and forecast of international
trade in conventional arms over the rest of the decade. The Department
undertook the study to assess market participation by U. S. producers and
consider possible industrial and economic implications for national security
and arms export policies.
"This is the first such forecast of its kind ever made by the Department of
Defense. The health of our industrial base continues to be important for our
nation's security. This study provides a baseline against which we can measure
propspects and policies," said Joshua Gotbaum, Assistant Secretary of Defense
for Economic Security.
Annual world-wide international arms deliveries declined sharply over the
1983-93 period, from about $65 billion to about $20 billion, a 69 percent
reduction. The decline in world-wide deliveries is due largely to reductions
in activity by the former Soviet Union, but is also attributable to reductions
in overall demand. Over the same period, annual U. S. deliveries in
international arms markets declined about 15 percent from approximately $13
billion to roughly $11 billion (constant 1991 dollars). U. S. deliveries are
expected to increase somewhat above this level through the remainder of the
decade. The unusually high 1991 and 1993 sales agreements are important
contributors to this increase.
As a result, the overall market share held by U. S. producers is now 53
percent, and may increase to as much as 59 percent over the forecast period.
The continued strong demand for U. S. products within this smaller market is
attributable to the performance of U. S. military systems in actual use, to the
desire of other nations for interoperability with U. S. forces, and to the
quality of research and development and follow-on support by U. S. firms.
U. S. government decisions concerning the export of conventional arms continue
to be made on the basis of national security and foreign policy concerns. The
report concludes that while changes in the level of support that the U. S.
government provides to arms exporters might have an impact on some
transactions, it would only have a limited effect upon overall market shares.
However, exports may help the armed services to maintain particular industrial
competencies at reduced costs. Producers of tanks and helicopters, for
example, have relied significantly on foreign sales to maintain certain
production lines and to cover overhead costs that otherwise would have been
paid by DoD and the taxpayers.
NOTE: Reporters may obtain copies of the study from the Directorate for
Defense Information, Room 2E765, the Pentagon, or by calling (703) 695-0192.
Others requesting copies should call (703) 697-5737.