U.S. Arms Exports Under Congressional Reporting Thresholds
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Issue Overview | Current Law and Reporting | Case Studies | Potential Research | Recommendations | Comment
Issue Overview
Under U.S. law, Congress must be notified of certain potential arms exports when their value reaches a minimum threshold. There are, however, arms exports that fail to meet that threshold, and it is very difficult to assess the number and amount of such "under threshold" transfers. There is evidence, however, that the value can be in the billions, creating a transparency and public knowledge challenge in understanding U.S. arms trade practice and its impact.
This page is meant to be a resource for sharing an understanding of law and practices, examples of and potential research avenues into under threshold arms exports, and recommendations. We welcome additional information and suggestions, which can be sent to info@ForumArmsTrade.org or added via the comment section below.
Forum-listed experts* to contact on this research includes: Elias Yousif, Seth Binder, Jeff Abramson
Other recommended experts include: Lillian Mauldin
* The Forum itself does not take positions, but does share findings, research, and recommendations by its listed experts and others addressing arms trade transparency. Inclusion on the Forum on the Arms Trade expert list does not indicate agreement with or endorsement of the opinions of others. Please contact experts directly for comments.
Under U.S. law, Congress must be notified of certain potential arms exports when their value reaches a minimum threshold. There are, however, arms exports that fail to meet that threshold, and it is very difficult to assess the number and amount of such "under threshold" transfers. There is evidence, however, that the value can be in the billions, creating a transparency and public knowledge challenge in understanding U.S. arms trade practice and its impact.
This page is meant to be a resource for sharing an understanding of law and practices, examples of and potential research avenues into under threshold arms exports, and recommendations. We welcome additional information and suggestions, which can be sent to info@ForumArmsTrade.org or added via the comment section below.
Forum-listed experts* to contact on this research includes: Elias Yousif, Seth Binder, Jeff Abramson
Other recommended experts include: Lillian Mauldin
* The Forum itself does not take positions, but does share findings, research, and recommendations by its listed experts and others addressing arms trade transparency. Inclusion on the Forum on the Arms Trade expert list does not indicate agreement with or endorsement of the opinions of others. Please contact experts directly for comments.
Current Law and Reporting
The Foreign Assistance Act (FAA) and the Arms Export Control Act (AECA) collectively outline acceptable reasons for the U.S. government to transfer arms and weapons internationally. The AECA, in particular, governs key processes for both Foreign Military Sales (FMS - which are negotiated government-to-government) and Direct Commercial Sales (DCS - which are negotiated between U.S. weapons manufacturers and international clients) -- distinctions between which contribute to transparency issues around arms transfers.
For both FMS and DCS, the AECA requires the U.S. Executive branch to notify Congress of potential weapons and arms transfers when they meet minimum thresholds before they can proceed with letters of offer and acceptance (LOAs - for FMS) or licenses (for DCS). For countries that are not NATO members, NATO, Japan, Australia, South Korea, Israel, or New Zealand, these thresholds are:
If the dollar value of a sale is below a given threshold, Congress does not have to be notified, and information on sales does not have to be publicized, especially in its initial stages. [factcheck that there is no requirement]
Functionally, the public is most aware of FMS notifications because they are put online on a website managed by the Defense Security Cooperation Agency (DSCA - see also related resource). There is no similar public transparency in the notification stage for DCS, and information when it does become available is much more limited. The value of sales and licenses, however, typically changes after the notification stage, adding to the challenge of identifying under threshold transfers.
Key resources:
The Historical Sales Book - FMS
The primary reporting mechanism for FMS is the annual Defense Security Cooperation Agency's (DSCA) Historical Sales Book. This document provides aggregate data on FMS from fiscal year 1950 through a set fiscal year, which individual year values given for the five most recent fiscal years. (The most current report is through FY 2020.) Since FY2015, the report in general defines a sale at the point when letters of offer and acceptance (LOAs) are signed and initial deposits from the recipient countries are submitted. This data includes sales that are both above and below congressional reporting thresholds, but does not separate those values.
Because this data is only published once a year, only provides aggregated total value, and is from the LOA stage, it is very difficult to determine the value of under threshold agreements. This also does not capture actual deliveries, which often occur years after LOAs are agreed and may not be at the same value as those LOAs.
Key resource:
655 Report - DCS
While members of Congress receive more details, DCS notifications to Congress are publicly published quarterly in the Federal Register, generally indicating simply that a license has been proposed at the threshold value, but not indicating actual value nor revealing contractors, using boiler plate language explaining that the more detailed notification "contains business information submitted to the Department of State by the applicant, publication of which could cause competitive harm to the U.S. firm concerned" (see example).
The primary public annual transparency report that provides actual values is the so-called 655 report published by the State Department, named after requirements of Section 655(b)(3) of the FAA. The report specifies the quantity of defense articles and defense services authorized to each foreign country by U.S. Munitions List category as well as a single overall total dollar value of all shipments that were authorized and exported during the fiscal year to each destination. This data includes transfers that are both above and below congressional reporting thresholds, but does not separate those values. [factcheck - I don't see in the report if this is true...]
Because this data is only published once a year and only provides an aggregated total value, it is very difficult to determine the value of under threshold agreements.
Key resource:
State Department factsheet on annual sales
In the past, the Congressional Research Service would publish an annual report on arms sales and would simply not even include DCS numbers because licenses were typically valid for four years and nearly impossible to track in detail. DCS, however, appears to be an increasingly important part of overall U.S. arms transfers, making the lack of transparency in possible under threshold sales even more concerning.
Absent that CRS report, media often cite an annual State Department factsheet that reports FMS notifications and FMS implementation, and DCS licenses. The most recent factsheet (below) indicates that $124.3 billion in DCS licenses were approved in FY 2020, compared to $87.6 billion in FMS notifications. It is unclear how under threshold sales are included in these figures. [factcheck - it's posible that the FMS "implemented" might include- it used Factbook definition... the rest appear to be Congressional notification numbers]
The Foreign Assistance Act (FAA) and the Arms Export Control Act (AECA) collectively outline acceptable reasons for the U.S. government to transfer arms and weapons internationally. The AECA, in particular, governs key processes for both Foreign Military Sales (FMS - which are negotiated government-to-government) and Direct Commercial Sales (DCS - which are negotiated between U.S. weapons manufacturers and international clients) -- distinctions between which contribute to transparency issues around arms transfers.
For both FMS and DCS, the AECA requires the U.S. Executive branch to notify Congress of potential weapons and arms transfers when they meet minimum thresholds before they can proceed with letters of offer and acceptance (LOAs - for FMS) or licenses (for DCS). For countries that are not NATO members, NATO, Japan, Australia, South Korea, Israel, or New Zealand, these thresholds are:
- major defense equipment valued at $14 million or more
- defense articles or services valued at $50 million or more
- design and construction services valued at $200 million or more
- firearms controlled under category I of the United States Munitions List and valued at $1 million or more
If the dollar value of a sale is below a given threshold, Congress does not have to be notified, and information on sales does not have to be publicized, especially in its initial stages. [factcheck that there is no requirement]
Functionally, the public is most aware of FMS notifications because they are put online on a website managed by the Defense Security Cooperation Agency (DSCA - see also related resource). There is no similar public transparency in the notification stage for DCS, and information when it does become available is much more limited. The value of sales and licenses, however, typically changes after the notification stage, adding to the challenge of identifying under threshold transfers.
Key resources:
- "Arms Sales: Congressional Review Process," Congressional Research Service, May 24, 2021.
- "U.S. Arms Sales and Defense Trade" Factsheet, State Department, January 20, 2021 - includes explanation of FMS and DCS processes.
- Congressional Notification Criteria and Requirements, DSCA table, undated.
The Historical Sales Book - FMS
The primary reporting mechanism for FMS is the annual Defense Security Cooperation Agency's (DSCA) Historical Sales Book. This document provides aggregate data on FMS from fiscal year 1950 through a set fiscal year, which individual year values given for the five most recent fiscal years. (The most current report is through FY 2020.) Since FY2015, the report in general defines a sale at the point when letters of offer and acceptance (LOAs) are signed and initial deposits from the recipient countries are submitted. This data includes sales that are both above and below congressional reporting thresholds, but does not separate those values.
Because this data is only published once a year, only provides aggregated total value, and is from the LOA stage, it is very difficult to determine the value of under threshold agreements. This also does not capture actual deliveries, which often occur years after LOAs are agreed and may not be at the same value as those LOAs.
Key resource:
655 Report - DCS
While members of Congress receive more details, DCS notifications to Congress are publicly published quarterly in the Federal Register, generally indicating simply that a license has been proposed at the threshold value, but not indicating actual value nor revealing contractors, using boiler plate language explaining that the more detailed notification "contains business information submitted to the Department of State by the applicant, publication of which could cause competitive harm to the U.S. firm concerned" (see example).
The primary public annual transparency report that provides actual values is the so-called 655 report published by the State Department, named after requirements of Section 655(b)(3) of the FAA. The report specifies the quantity of defense articles and defense services authorized to each foreign country by U.S. Munitions List category as well as a single overall total dollar value of all shipments that were authorized and exported during the fiscal year to each destination. This data includes transfers that are both above and below congressional reporting thresholds, but does not separate those values. [factcheck - I don't see in the report if this is true...]
Because this data is only published once a year and only provides an aggregated total value, it is very difficult to determine the value of under threshold agreements.
Key resource:
- 2020 Section 655 Report Introduction - which includes definitions of USML categories
- 2020 Section 655 Report
State Department factsheet on annual sales
In the past, the Congressional Research Service would publish an annual report on arms sales and would simply not even include DCS numbers because licenses were typically valid for four years and nearly impossible to track in detail. DCS, however, appears to be an increasingly important part of overall U.S. arms transfers, making the lack of transparency in possible under threshold sales even more concerning.
Absent that CRS report, media often cite an annual State Department factsheet that reports FMS notifications and FMS implementation, and DCS licenses. The most recent factsheet (below) indicates that $124.3 billion in DCS licenses were approved in FY 2020, compared to $87.6 billion in FMS notifications. It is unclear how under threshold sales are included in these figures. [factcheck - it's posible that the FMS "implemented" might include- it used Factbook definition... the rest appear to be Congressional notification numbers]
- "U.S. Arms Transfers Increased by 2.8 Percent in FY 2020 to $175.08 Billion," State Department factsheet, January 21, 2021.
Case Studies
Office of the Inspector General Department of State Report - 2020
In August 2020, the Office of the Inspector General (OIG) of the Department of State issued a report (non-redacted version) regarding the Secretary of State’s May 2019 certification of emergency under the AECA. This “emergency certification waived congressional review requirements for 22 arms transfer cases to the Kingdom of Saudi Arabia, the United Arab Emirates, and the Hashemite Kingdom of Jordan, with a total value of approximately $8.1 billion.” While the OIG found that no laws were broken, it noted that that risks were not thoroughly assessed for this certification and that the prevention of civilian casualties was not taken into complete consideration. Additionally, the OIG found that:
Office of the Inspector General Department of State Report - 2020
In August 2020, the Office of the Inspector General (OIG) of the Department of State issued a report (non-redacted version) regarding the Secretary of State’s May 2019 certification of emergency under the AECA. This “emergency certification waived congressional review requirements for 22 arms transfer cases to the Kingdom of Saudi Arabia, the United Arab Emirates, and the Hashemite Kingdom of Jordan, with a total value of approximately $8.1 billion.” While the OIG found that no laws were broken, it noted that that risks were not thoroughly assessed for this certification and that the prevention of civilian casualties was not taken into complete consideration. Additionally, the OIG found that:
The records show the Department approved a total of 4,221 below-threshold arms transfers involving Saudi Arabia and the United Arab Emirates, with an estimated total value of $11.2 billion since January 2017. Components of PGMs were among the below-threshold transfers to Saudi Arabia and the United Arab Emirates approved during this period. Although the Department approved below-threshold transfers of PGM components as early as January 2017, the Under Secretary for Arms Control and International Security notified the Secretary in 2018 and 2019 that the Department intended to proceed with additional below-threshold approvals notwithstanding congressional holds on larger, above-threshold transfers of similar items.
Indications that the State Department approved 4,221 and made $11.2 billion of under threshold transfers in this instance, including those related to weapons for which Congress was acting to hold sales about which it was notified, bely the need for greater transparency into under threshold transfers.
Potential Research
describe ideas for how to get at this, including comparing sources over years, looking at Census export data, etc
describe ideas for how to get at this, including comparing sources over years, looking at Census export data, etc
Recommendations
Include here some recommendations - such as Congress mandating an annual report on this, and also how some proposed legislation might get at this (require approval for some weapons regardless of value as in the Safeguard act), also include SAM's transparency recommendations (which are not yet public)
Include here some recommendations - such as Congress mandating an annual report on this, and also how some proposed legislation might get at this (require approval for some weapons regardless of value as in the Safeguard act), also include SAM's transparency recommendations (which are not yet public)
Comment
Please go to this blog post (forthcoming) to leave a comment and see/reply to what others are suggesting about this research. (Here's an example of how this could be done, although the comments to it are spam that needs to be deleted.... Happy to take a different approach, but would be good to invite comments and conversation.)
Please go to this blog post (forthcoming) to leave a comment and see/reply to what others are suggesting about this research. (Here's an example of how this could be done, although the comments to it are spam that needs to be deleted.... Happy to take a different approach, but would be good to invite comments and conversation.)