Aerospace & Defense Could Prove Crucial to Meeting Obama Export Goal

The Democratic Leadership Council put out an interesting trade brief last week about President Obama’s pledge to double U.S. exports in five years. That pledge, contained in the president’s State of the Union speech, would require lifting total exports from $1.5 trillion last year to $3 trillion in 2014. The DLC says the goal is achievable, but notes the only time recently that exports have doubled in five years was during the Ford and Carter administrations — when the increase was due largely to inflation. The Council recommends focusing on product areas where the United States has a distinct competitive edge, such as medical technologies, information systems and media.

One clear area of advantage for America is aerospace and defense technology. The United States spends as much on high-tech weapons as the rest of the world combined, so it is in a position to offer items that no other country can match. For example, the F-35 fighter is the only truly stealthy tactical aircraft likely to be available for sale in global markets until 2020 at the earliest, and it was designed to be affordable for U.S. allies. The Littoral Combat Ship is the fastest, most versatile shallow-water warship in the world, and very well suited to the navies of countries engaged in coastal security missions. The C-17 and C-130 airlifters far surpass the performance of any other military cargo planes currently in production around the world, without facing the uncertainties associated with the faltering Airbus A400M. From Apache attack helicopters to Patriot air defenses to Aegis combat systems, America sets the global standard for advanced weaponry.

The Pentagon’s 2010 Quadrennial Defense Review commits the administration to revising export control laws so they no longer impede the sale of defense systems to overseas friends and allies. That long overdue step will not only bolster U.S. technology exports, but also help other nations to be more effective partners with America in preserving global security. There are many other steps that need to be be taken, but by working closely with industry, the administration could generate 5-10% of the desired increase in export revenues just by selling more defense-related items overseas. Many nations need to recapitalize aging Cold War arsenals, and other countries now have the revenues needed to upgrade defenses against emergent threats. A case in point is Saudi Arabia’s modernization of its Eastern Fleet, which is required to cope with the security challenge posed by Iran.

With regard to commercial aerospace exports, there is a high likelihood that demand for commercial transports (airliners) and business jets will recover smartly during the five years covered by the president’s pledge. Boeing used to be the dominant player in the commercial transport market, and it could quickly be restored to that status if the administration would insist that Airbus stop receiving launch subsidies recently condemned by the World Trade Organization. It is outrageous that Airbus has been allowed to force U.S. companies out of the airliner market and under-price Boeing planes by tapping patently unfair subsidies from European governments. The United States has lost hundreds of billions of dollars in export earnings as a result — not to mention tens of thousands of high-paying aerospace jobs — but the WTO has now given Washington the ammunition it needs to take back market share. After all, what does Airbus have that can compare with a Dreamliner?