Law Firms: Trump's Arms Sales Order Is Positive for Industry but Will Depend on Implementation
A new executive order aimed at reducing regulatory restrictions around weapons sales could speed up exports to allies and remove other trade barriers, law firms said, although key questions remain about how U.S. agencies will implement it.
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The order, signed by President Donald Trump earlier this month, directs the government to develop a list of “priority” foreign partners and end-use items for speedier transfers; reevaluate restrictions imposed by the multilateral Missile Technology Control Regime; propose an update to the existing congressional notification thresholds for certain military sales; and more.
Holland & Knight said the order looks to overhaul the historically slow Foreign Military Sales process, which typically features sales contracts that face “lengthy” approvals and “multiple layers of review” by the Defense and State departments. Ensuring those sales comply with all U.S. export controls laws “adds to the duration of the process,” the firm said in a client alert.
“The new EO aims to improve the overall efficiency of the FMS process,” it said, “making it more responsive to the needs of foreign partners and enhancing the competitiveness of U.S. defense products in the global market.”
Brownstein Hyatt noted that the State Department and Pentagon must develop a list of priority countries and weapons systems within 60 days, which could help speed up both agencies' internal systems for sales to close U.S. allies. But the firm also said it’s unclear how exactly those countries will be prioritized and whether certain nations will lose their current place in line after the 60 days.
“Will the prioritization only focus on future sales or will the Trump administration reorganize current sales? How will priority systems be determined -- will it be based on demand from other countries or will it be based on what the United States is able to produce?” the firm asked. “As the United States prioritizes systems, how will it balance the Pentagon’s own need for the same systems?”
It also said a U.S. reassessment of controls over certain items governed by the Missile Technology Control Regime could help remove long-standing barriers to exports of missile technology and unmanned drones to close trading partners. The Biden administration in January announced revised policy guidance for missile technology exports in a bid to streamline defense trade with close allies (see 2501080039).
“The Biden administration had already made some changes; this EO indicates the Trump administration plans to go further, potentially focusing on the sale of these weapons for key partners,” Brownstein Hyatt said.
The order also signals that the Trump administration could push to update the thresholds for congressional reviews of arms sales, the firm said, and to work with Congress to make sure sales are reviewed “in a timely manner.” Brownstein Hyatt noted that those monetary thresholds haven’t been updated “in years.” If they're raised, “fewer sales will have to go through congressional review and thus will move more quickly through the process.”
But the firm said it may be unclear how Congress will respond to this proposal. “Will Congress be willing to reduce the number of sales it reviews? Will Congress want to make changes to the current review process, which includes both formal and informal review?” it asked. “Will the Trump administration decide to make changes to the process unilaterally, such as eliminating the informal review process?”
Another change could help the government work with companies so they integrate “exportability” into the design phase of weapons, the firm said, which may keep the government from having to “go back and look at changes that need to be made to a weapon at the end of the process” rather than at the start. The White House may also look to update the list of items that are required to be sold only through FMS and revise the U.S. Munitions List, it said.
“Each of these changes potentially reduces the amount of time it takes to review an arms sale,” Brownstein Hyatt said, adding that fewer items on the FMS list could mean that more items will benefit from the U.S. direct commercial sale process, “which can be quicker.” The firm said it’s watching to see how the Trump administration will balance these changes “against the risk of weapons falling into the wrong hands,” and whether it needs more staffing to carry out these updates.
Wiley Rein said the order is “largely continuing” the government’s efforts to reform its arms sales processes. The Pentagon for years has worked to speed up those sales, including by releasing recommendations in 2023 aimed at “breaking historical inefficiencies” in arms transfer procedures (see 2306200012 and 2310270028).
Wiley also noted that the order calls on U.S. agencies to implement the 2018 conventional arms transfer policy that Trump outlined during his first term. Defense contractors “should refamiliarize themselves with” that policy “and keep an eye out for the lists of priority partners and end-items, as well as potential changes to the restrictions on supplying Category I items” in the MTCR, Wiley said.