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Read the Directions Carefully Before Playing: State Department Releases Military Drone Export Guidance

The United States has a responsibility, or so the State Department tells us, to ensure the sales and exports of Unmanned Aerial Systems (UAS) are consistent with U.S. national security interests, U.S. policy, and even U.S. values. While the government would be glad to keep the export of military drones in lock-step with our policy goals, the realities of a rapidly expanding UAS market and global competition has forced export regulators to consider how to balance the potential loss of economic opportunity against the loss of control of UAS technology.

On February 17, the State Department released a fact sheet describing its new policy (the official policy is classified) on licensing the export of military and commercial drones. From what we can see, the regulators have declined to significantly unclench restrictions on drone exports. Drone export license applications will be considered on a “case-by-case” basis. Although a case-by-case assessment does leave room for manufacturers to hope that they will be allowed to begin exporting drones, without a broader authorization, the bureaucratic process of acquiring a license for every transaction may hinder U.S. manufacturers in competing in the world market.

The problem with regulations in this area is that the United States does not hold as clear a competitive advantage in drone production as it does in heavier military manufacturing. Currently, China and Israel lead the pack in the $6 billion drone market, positioning themselves ahead of the United States because of the limitations on U.S. exports. In addition, countries including India, Iran, Russia, Taiwan, Turkey, and the United Arab Emirates are also developing drones. Although the United States will be reigning in the sales of Predators, Reapers, and Global Hawks, by maintaining strict licensing requirements for export, China, notoriously less scrupulous about selling arms to the highest bidders, may be making similar technologies available to all comers.

The conditions placed on the export of military UAS will reportedly include:

  • Sales and transfers of sensitive systems to be made through the government-to-government Foreign Military Sales program;

  • Review of potential transfers to be made through the Department of Defense Technology Security and Foreign Disclosure processes;

  • Each recipient nation to be required to agree to end-use assurances as a condition of sale or transfer;

  • End-use monitoring and potential additional security conditions to be required; and

  • All sales and transfers to include agreement to principles for proper use.

The last condition appears to be an attempt to preempt the loud and growing objections, both at home and abroad, to the use of drones.  Those opposed to or hesitant over the military use of drones note that drones may be used, intentionally or unintentionally, by a government to harm innocent civilians or violate human rights. In apparent response to those objections, the State Department lists the following principles to which end users of drones must agree:

  • Recipients are to use these systems in accordance with international law, including international humanitarian law and international human rights law, as applicable;

  • Armed and other advanced UAS are to be used in operations involving the use of force only when there is a lawful basis for use of force under international law, such as national self-defense;

  • Recipients are not to use military UAS to conduct unlawful surveillance or use unlawful force against their domestic populations; and

  • As appropriate, recipients shall provide UAS operators technical and doctrinal training on the use of these systems to reduce the risk of unintended injury or damage.

Interestingly, the new export policy follows on the heels of an announcement by the Federal Aviation Administration of new regulations related to the use of drones domestically. The FAA rules permit domestic use of UAS under certain specific conditions, including:

  • UAS must weigh less than 55 pounds;

  • UAS must be limited to an airspeed of 100 mph and an altitude of 500 ft;

  • UAS may be flown only within sight of the operator; and

  • UAS may only be flown by persons certified by the FAA.

The regulation of drones, both for domestic use and for export, is a complicated task for any one agency, let alone a number of agencies attempting to coordinate between their bureaucratic processes. However, no matter how lumbering and lurching efforts at regulation may appear in comparison with the rapid and constant developments in drone technology and use, Government regulators are working constantly to define their stance on the manufacture, sale, and operation of UAS. It follows that the regulations will be subject to sudden change over the coming years. Companies seeking to position themselves in the burgeoning drone market would be well advised to remain well advised on the applicable regulations.

Copyright © 2018, Sheppard Mullin Richter & Hampton LLP.

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About this Author

Reid Whitten, partner, Sheppard Mullin Law Firm
Partner

Reid Whitten works with clients around the world to plan, prepare, and succeed in global business transactions.

In the areas of U.S. and international sanctions, export and defense export controls, and anti-corruption regulations, he supports clients in detecting and deterring potential compliance issues as well as conducting and defending investigations and enforcements. Mr. Whitten also advises on anti-dumping, anti-money laundering, and anti-boycott regulations.

Mr. Whitten is a thought leader on cross-border business regulations. He teaches a seminar on The Law of...

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