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19 Oct 04. The FT reported that the British government and industry officials are cautiously optimistic that frayed relations with the US over access to sensitive Americanmilitary technologies have begun to mend after the US Congress voted to grant the UK preferred status for defence export licences.

The legislation, now awaiting signature by President George W. Bush, was passed by Congress after months of bitter recriminations on both sides of the Atlantic.

The UK has been pushing for an exemption from complex American arms trafficking regulations that would make it easier for British companies to import sensitive weapons technologies.

Conservative congressional Republicans repeatedly blocked the exemption from the rules – known as the International Traffic in Arms Regulations (ITAR) – arguing British export regulations are relatively porous and would allow third countries to gain access to sensitive US technologies.

Although the new legislation falls short of granting the UK a complete ITAR waiver, it orders any licence application by the UK to be “expeditiously processed” by the State Department, giving British companies – along with Australian ones – preferred status. A UK defence ministry official said the British government was disappointed that the ITAR waiver was excluded from the bill; a Senate-passed version of the waiver was deleted from the legislation at the 11th hour. However, the MoD said it welcomed the substitute language, saying “it goes some way forward towards meeting the concerns of UK industry”.Recent discussions among leading British defence industry executives have expressed similar sentiments, according to people involved in the talks.

There remains some uncertainty about how the new legislation will be implemented, however, since the bill does not define “expeditiously processed”, leaving the US administration some latitude in how it interprets the new rules. The disagreements over technology transfers to the UK have threatened to derail co-operation on high profile projects such as the Joint Strike Fighter, which Britain is helping to finance and plans to buy for the Royal Navy.

American defence companies also expressed misgivings about the legislation. Most large US contractors have pushed hard for the waiver for the UK and Australia, since deregulation would make it easier for them to sell weapons to the two key export markets.

However, since the new legislation does not fully exempt the UK and Australia – and merely gives them a higher priority in the process – US companies fear it will not speed up the overall foreign licensing process at all.

“If you do a licence waiver, that takes work out of the system and it frees government resources to make everything faster,” said Joel Johnson, head of international issues at the Aerospace Industries Association, the primary lobbying group for the US defence industry.

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