Ethnocentric vs. Regiocentric Consolidation in the Aerospace and

loss of technological superiority and the proliferation of capabilities that could be used, one
day, against the [US]. This concern is mirrored in the US Congress where issues relating to
defence technology exports and direct foreign investment by European firms in the US defence
industrial economy have been hotly debated.” 161
It has been argued that as a result, US high-tech companies have often been at a competitive
162 163
disadvantage compared to their foreign rivals from other Western and non-Western countries.
Matters are made worse by the extraterritorial reach of American export control provisions, which
extend to foreign subsidiaries of US companies, foreign companies using American technology,
etc. 164 However, the weight of US government support for American defence companies as well as
the vast size of the Pentagon’s (highly protected) military procurement market gives US companies
a major competitive advantage vis-à-vis foreign firms, thus counterbalancing any negative
economic impact due to strict defence export regulations. 165 Sales of US weapons systems are
buoyed by their technological sophistication and competitive pricing (due to superior economies of
scale) as well as Washington’s status as the world’s last remaining superpower, which provides
unique political and military levers to convince foreign governments to opt in favour of US-made
weapons. 166 Despite stringent export controls, America remains by far the world’s biggest arms
exporter. Therefore, demands from Washington that other countries exercise restraint and adhere to
stricter export controls are often viewed as protectionism bordering on hypocrisy:
quantity of exports, eliminate subsidies, impose taxes, or reach some other solutions’.” (Milner & Yoffie, 1989) p. 260.
Inserted quotations from Congressional testimony by a senior Boeing executive in June 1987.
161 CSIS (2003) p. 27
162 “[T]o the extent that [export] controls are interpreted / implemented unevenly, firms from countries with more liberal
policies enjoy a bonus of greater sales revenues and world market share, lower compliance costs, higher resources for
R&D, and hence continuing competitive advantages over their handicapped [US] rivals.” Parkhe (1992) p. 50
163 “Evidence shows that states routinely curtail capitalists’ global activities if these interfere with states’ other projects
or interests, despite capitalists’ complaints that government constraints cost them lucrative markets or stigmatise them
as unreliable trading partners. The US, for example, restricts Boeing’s missile sales to China, to comply with
international arms control treaties, protect Taiwan, and preserve the US traditional ‘hard’ geopolitical hegemony.”
Gritsch (2005) p. 14
164 US export control regulations apply “to US foreign subsidiaries and independent foreign companies selling USorigin
end products, US-origin parts and components incorporated in foreign equipment and even foreign products
manufactured with US-origin technology”. Parkhe (1992) p. 54
165 US defence export control regimes also have major holes, for example with regard to Israel, which has continued to
benefit from extensive transfer of advanced US military technologies despite a rather long history of violating US reexport
regulations vis-a-vis South Africa, China, and India.
166 The 1991 Gulf War highlighted the superiority of US military technology and demonstrated Washington’s role as a
guarantor of international security. “The superior performance of American weapons in the Gulf War positioned US
companies to win major new business from that and other regions. […] As the industrialised Western powers reduced
their procurement budgets, foreign business became a critical profit centre, even determining the survival of many
companies. The White House helped whenever it could. The Bush administration actively promoted and negotiated the
lion’s share of the [US]$83.1 billion in arms export agreements in the four years following 1990 (up from [US]$34.5
billion during the previous years). (Keller & Nolan, 1997-1998) pp. 116-117
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