Arms Export Control Act

Pursuant to a congressional request, GAO reviewed certain Arms Export Control Act (AECA) provisions designed to improve defense cooperation with North Atlantic Treaty Organization (NATO) allies.

GAO noted that: (1) the President may grant waivers to eligible countries in connection with sales that significantly advance U.S. Government interests in NATO standardization; and (2) originally, only NATO members were eligible for exemption from paying asset use charges and nonrecurring costs, but the President's authority to waive these charges has been extended to include Japan, Australia, and New Zealand. GAO found that: (1) about $1 billion in charges and fees have been waived for nonrecurring costs between fiscal year 1981 and 1985; (2) the number and value of waivers approved varied depending on the type, quantity, and cost of equipment purchased; (3) the Department of Defense sought and received additional benefits as a condition of granting nonrecurring cost waivers; and (4) waiver application denials were based on the country's failure to demonstrate benefits other than standardization and interoperability. GAO also found that: (1) legislation authorized the President to provide, on a reciprocal basis, quality assurance, inspection, contract audit services, and training to individual NATO countries; (2) recent legislation permits the transfer of production items to cooperating NATO allies outside of the previously required foreign military sales (FMS) process; (3) the AECA requires that proposed FMS transfers and direct commercial sales of major defense articles include a sensitivity of technology statement; and (4) the AECA provides a preference to NATO nations by reducing the time during which Congress can object to a proposed FMS transfer.