Ethnocentric vs. Regiocentric Consolidation in the Aerospace and

share with the [US] congruent and reciprocal policies in export controls, industrial security,
intelligence, law enforcement, and reciprocity in market access.” 173
Due to wide-spread US doubts about the effectiveness of Europe’s defence export and technology
transfer regimes, any attempt by European companies to make direct investments in the vast and
highly lucrative American defence market is generally viewed with a mix of suspicion and hostility.
The Committee on Foreign Investment in the United States (CFIUS) is the key institution to
evaluate the potential impact of any FDI on America’s national security posture. 174 In the aerospace
sector, the Pentagon normally takes the lead in investigating whether FDI / M&As involving an
American company could potentially undermine the country’s military-technological position by
creating new vulnerabilities and dependencies. CFIUS reviews involve an analysis of how the
planned transactions would affect the American aerospace industry’s ability to independently meet
the country’s national defence requirements. CFIUS can either be notified by any of the parties
involved in the planned transaction, or it may itself decide to review the FDI / M&A. Once CFIUS
has been notified, at least three Committee members must decide within 30 days that a formal
review of the case is warranted. If the answer is ‘yes’, CFIUS has another 45 days to review the
transaction and make a recommendation to the President on whether the operation should be cleared
or blocked. Finally, it is up to the President to decide within 15 days whether the transaction can go
ahead or not. While the vast majority of CFIUS decisions across the different industry sectors are
made rather quickly, large-scale (aerospace) M&As consume significant time and resources and
tend to attract unwanted political attention from members of the US Congress prone to lobbying by
interested third parties.
Finally, European aerospace companies generally face tough obstacles to selling their products on
the lucrative US defence market. The Pentagon’s acquisition policy favours American over
European / foreign companies, whose management, technology base, production facilities and
supply chains are at an elevated risk of potential political and economic pressure / interference by
foreign governments and companies. This ‘Fortress America’ approach is partly mirrored by a
‘Fortress Europe’ defence acquisition policy. However, European defence markets are generally
much more open to US companies than vice versa – not least because American A&D companies
can often deliver proven high technology products at more competitive prices and delivery dates
than their rivals from Europe and elsewhere. In addition, advanced arms sales do always have an
173 AECA section 38
174 CFIUS, formed in 1975, is chaired by the Treasury Secretary and includes the Secretaries of Defense, State and
Commerce, the Attorney General, the OMB Director, the USTR, the Chairman of the Council of Economic Advisers,
and several other government representatives.
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