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Arms Export Control Act: Purpose and Use of Selected Provisions


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Section 21(e)(2) of the Arms Export Control Act (AECA) of 1976 authorizes the President, in making sales of defense articles or services, to reduce or waive charges for the use of plant and production equipment (commonly referred to as asset use) and for a proportionate amount of any nonrecurring costs of research, development, equipment and production of major defense Specifically, the President may grant waivers to eligible countries in connection with sales that ". . .significantly advance United States Government interests in North Atlantic Treaty Organization standardization, standardization with the Armed Forces of Japan, Australia, or New Zealand in furtherance of the mutual defense treaties between the United States and those countries, or foreign procurement in the United States under coproduction arrangements." The authority for making these waivers has been delegated to the Secretary of Defense and, in turn, to the Defense Security Assistance Agency (DSAA). Originally, only North Atlantic Treaty Organization (NATO) members were eligible for exemption from paying asset use charges and nonrecurring costs by this provision. In 1981, the President's authority to waive these charges was extended to include Japan, Australia, and New Zealand. According to a DOD official, the three non-NATO countries were exempted in response to their complaints of not being treated with the same status as the United States' NATO allies. For all other countries, these costs are to be fully recovered.



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