investments. Thus, our objective is to create an environment which fosters maximum use of combined technological and industrial capabilities by working within the NATO Conference of National Armaments Directors (CNAD), through individual bilateral and mutilateral agreements for specific development and production programs, and by placing emphasis on utilizing the broad industrial infrastructure for cooperation which exists in international industry-to-industry relationships.

The U.S. shares strategic and security concerns with other allies as well as friendly nations with whom we have no alliance arrangement. We will expand cooperation with these nonNATO Allies and friendly nations and will assist them in developing and maintaining mutually beneficial, indigenous defense capabilities. We will approve the sale of defense equipment, with appropriate safeguards taken to keep technology secure from exploitation by our adversaries, to those nations whose policies are in consonance with ours and those of our NATO Allies.

Department of Defense Authorization Act, has recognized the benefits of an improved free world's defense posture to be realized through cooperation with our allies in the research, development, production, and fielding of armaments systems.

we

We must leave no doubt of our commitment to maintain adequate Alliance conventional capabilities. Armaments cooperation built on a solid appreciation for the commitment to the protection of the West's technological lead is one of the primary means to maintain these conventional capabilities. In establishing operational and design requirements for future major weapons systems, consult with European counterparts. Cooperative joint research, development, production and acquisition programs will be thoroughly explored, particularly where common operational and design requirements can be established; mission effectiveness would be maintained at an acceptable level; technology sharing, on a bilateral basis, would provide near equal benefits to cooperating nations; economies of scale and/or avoidance of duplicative costs are and possible; and standardization interoperability of NATO forces and equipment would be enhanced.

Congressional authorization to set aside $250M to be used exclusively for NATO cooperative programs and the $125M appropriated in FY 1986 are strong and much appreciated signals from the Congress in support of arms cooperation with our NATO allies. Our actions will reinforce our commitment to Allied cooperation and be fully in keeping with the Congressional intent of this resolution.

We are moving forward on a number of fronts to increase transatlantic defense industrial cooperation. The Services have taken a number of actions that have focused on increased interaction and cooperation with our NATO partners. The Services have been asked to thoroughly consider allied capabilities before any new developments are begun. They will give special management attention to collaborative development programs, and acquisition of existing equipment from other Alliance nations.

The Emerging Technologies Initiative was launched within NATO to assure priority on the application of emerging technologies in improving conventional military capabilities. A small number of force multiplying systems have been endorsed by Ministers for special tracking and management attention under the

purview of the CNAD, with a view to acheiving in-service dates as close to 1990 as practicable.

The Department of Defense has an ongoing Foreign Weapons Evaluation Program funded at $17M in FY86. The objective of this program is to evaluate foreign weapons, which are in development or in service, that might be purchased or developed further for inclusion in the U.S. inventory. While the sums involved are small in relative terms, the results are significant in terms of reducing U.S. R&D costs, accelerating the introduction into service of new systems, promotion of standardization and interoperability of fielded systems with our allies, and achievement of procurement cost advantages.

Non-NATO Armaments Cooperation and Defense Trade

• Northeast Asia (Korea, China)

In Northeast Asia, we continue to assist the Republic of Korea through technological consultation and cooperative armaments development; i.e., tank and missile development. We are thereby strengthening the capabilities of that nation to maintain its freedom and independence.

Modernization of the People's Republic of China's defensive capability is being supported within specific mission areas; i.e., anti-tank, air defense, artillery, and surface ship antisubmarine warfare. These do not threaten the security of the U.S., its allies, or other friendly nations in the Pacific Basin, but are significant in the growth of common interests between our nations. Congress has been advised of our initial Foreign Military Sales case with China which covers artillery fuzes and detonators. Other sales and coproduction programs are under active discussion.

• Two-Way Technology Cooperation with Japan

As Japan has a considerable base of technology that could benefit U.S. defense systems, we have expanded our efforts to develop technology and systems cooperation with Japan, with particular emphasis being placed on encouraging a flow of Japanese military technology to the U.S. The benefits of increased cooperation with Japan are several: (1) a strengthened U.S. industrial base, resulting from the infusion or stimulus of Japanese technology in those areas in which Japan has a lead; (2) more efficient use of our R&D resources, as we avoid duplicating Japanese

development

developing and introducing better systems sooner; and, (3) improved interoperability with Japanese fielded systems, thereby strengthening the security force structure in the Northern Pacific. In this regard, we are pursuing the August 1984 recommendations of the Defense Science Board (DSB) and work regularly with private sector advice from the Defense Policy Advisory Committee on Trade (DPACT).

Each of the Services has designated a Senior National Representative (SNR) to organize and manage a coherent program of technological cooperation with Japan and to be the principal contact within his Service to explore possibilities for joint research and development. Separately, technical experts in specific mission areas assess the threat, the systems and technologies available to meet that threat, and the systems and technologies in development and needed for development in that specific mission area. The first two of such groups have been established in the air defense and C3 mission areas. We have completed a survey and published a report on the Electro Optics/ Millimeter Microwave(EO/MMW) industry in Japan, and worked out with the Japanese government procedures for the transfer of Japanese military technology to the U.S.

Southeast Asia, South Asia and
Australia

In Southeast Asia, programs of mutual benefit are being explored with Indonesia and Singapore, and we are working closely with other nations in the area against a backdrop of greater Soviet presence in the South China Sea. Cooperative programs with Australia continue to progress and new initiatives are under discussion. Evolving technical cooperation with India is a dynamic development which is being pursued in the wake of Presidential initiatives in the Asian subcontinent.

Industrial Cooperation with
Pakistan

In Pakistan, defense industrial cooperation is becoming a significant factor in the U.S.-Pakistan relationship. This agreement, which is designed to improve the defense industrial base; i.e., tank overhaul, aircraft overhaul, and munitions production. The cooperation will increase in importance as Pakistan's forces acquire more U.S. equipment under our security assistance to that nation.

R&D Efforts with Friendly Middle East Nations

Cooperation with Israel continues and has provided valuable battle tested information and equipments to the U.S.

The Memorandum of Agreement between the U.S. and Israel has led to significant exchanges of technical information, cooperative R&D programs on new systems, exchanges of scientists and engineers, and U.S. procurement of proven Israeli weapon systems.

The U.S.-Egypt Defense Production Assistance Agreement remains an important part of our relations with Egypt. This program, is designed to improve Egypt's defense industrial base; i.e., tank overhaul and radar production. It is a principal element in our relationship with one of the leading nations in this critical region of the world.

• Latin America

We are investigating the feasibility of defense industrial cooperation programs in the Central American region. We expect to aid Central American countries to assess some of their most important military requirements and to help them establish industries which can economically support their defense capabilities. Bilateral cooperation with Brazil has been enhanced through cooperation in scientific and engineering exchanges and will be developed further as the size and sophistication of Brazil's defense industry grows.

Challenges and Opportunities

We must continue to look to international cooperation in the research, development and production of armaments as a means of strengthening the security and economic base of the free world. Through partnership with our allies we can build better systems. With greater standardization and common procurements we can enhance economies of scale, lower procurement costs, and strengthen the interoperable character of our forces. In addition, involvement in industrial arrangements should result in more work for these industries, less unemployment, and more defense equipment for financial resources expended.

DoD currently has reciprocal memoranda of understanding with NATO allies to lessen or remove barriers to defense trade. Renewal of these agreements will begin in 1986, and the DoD has proposed to transition these bilateral agreements into a U.S.-NATO Europe agreement. This would be a step toward desired integration of the European defense market. Western security and technology cooperation in armaments within NATO will be greatly helped if Europe is able to organize defense research, development and production on a scale more comparable to the scale of the U.S.