The tens of bil-
figures from the Arms Control and Disarm-
for sales in third countries against foreign
ament Agency suggest that the U.S. share of
producers" who have "no equivalent added
lions of dollars
the global arms market in the mid-1990s--55
costs."31
that major
percent--is greater than the shares of all other
Although other U.S. industries have been
weapons makers
supplier nations in the world combined.29 The
given some funding by the government over
the years, no industry has received the consis-
Pentagon predicted a few years ago that U.S.
receive in govern-
tent level of support received by the weapons
companies are likely to dominate the world
ment R&D fund-
companies. As we will see, U.S. weapons man-
arms market for years to come with or without
ing provide them
ufacturers are the major recipients of govern-
special government financing arrangements or tax
ment R&D funding, and arms exporters have
breaks:
with an exclusive
been major beneficiaries of this generous
advantage over
R&D funding policy.
The forecasts support a continuing
To cite just two examples: the Boeing F-15
strong defense trade performance for
both U.S. com-
fighter, which has been the subject of multi-
U.S. defense products through the
mercial firms
billion-dollar export packages to Israel and
end of the decade and beyond. In a
and foreign
Saudi Arabia, received $2.9 billion in govern-
large number of cases, the U.S. is clear-
ment R&D support; and the Lockheed
ly the preferred provider, and there is
weapons
Martin F-16, which has been one of the most
little meaningful competition with
makers.
successfully exported fighters in history, gar-
suppliers from other countries. An
nered $1.8 billion in Pentagon R&D support
increase in the level of support the
during its development phase.32 Most private
U.S. government currently provides
for arms exports is unlikely to shift
companies must fund their own R&D of new
the U.S. export market share outside a
products. U.S. weapons manufacturers re-
range of 53 to 59 percent of world-
ceive huge R&D subsidies from the govern-
wide arms trade.30
ment for items that they are then permitted
to sell on the world market for a substantial
profit. Is it really so unfair to ask that
Despite the U.S. arms industry's domi-
weapons manufacturers and their buyers
nance of the global market (and corre-
reimburse the U.S. Treasury for a small por-
sponding lack of need for special tax
tion of the R&D funds that made those sys-
breaks), its advocacy of the repeal of recoup-
tems possible? The alternative is for the U.S.
ment fees received support from at least one
government to require defense contractors to
independent source: the Presidential Advis-
fund their own R&D, as former chief of naval
ory Board on Arms Proliferation Policy. In
operations Mike Boorda advocated.
its 1996 report to Congress, the board,
In arguing against the repeal of recoup-
which was chaired by Janne E. Nolan of the
ment fees, the Congressional Budget Office
Brookings Institution, expressed sympathy
has suggested that the industry's arguments
with the industry's arguments that R&D
for repeal of the fees be put in the context of
recoupment fees are "discriminatory." The
all the other advantages those firms receive
board argued that the fees "have no such
from the government:
parallel in other industries where the U.S.
government has made major R&D invest-
U.S. defense industries have signifi-
ments in developing and purchasing capital
cant advantages over their foreign
equipment--for example, power generation,
competitors and thus should not
telecommunications, computer systems,
need additional subsidies to attract
and nuclear reactor technology." The board
sales. Because the U.S. defense pro-
also agreed with the suggestion by U.S. arms
curement budget is nearly twice that
manufacturers that the fees could be a "clear
of all Western European countries
and significant price discriminator against
combined, U.S. industries can realize
[U.S. arms manufacturers] as they compete
11