What Happened?
The U.S. defense partnership with four close allies: Canada, the United Kingdom, Australia, and New Zealand, has not delivered the shared industrial base Congress envisioned, according to a new analysis. The Congressional Research Service (CRS) published a report on the National Technology and Industrial Base (NTIB) that covers five countries.
The NTIB started as a U.S.-Canada arrangement in the fiscal 1993 National Defense Authorization Act (NDAA). Congress added the U.K. and Australia in the fiscal 2017 NDAA and New Zealand in the fiscal 2023 NDAA.
Why Does it Matter to Me?
When allied defense industries work together, costs get shared and weapons development speeds up, savings that flow back to taxpayers. When they don't, each country duplicates work the others have already done.
The report said the U.S. share of global research and development spending fell from about 69 percent in 1960 to about 30 percent in 2022, reflecting faster investment growth elsewhere rather than declining U.S. investment. NTIB membership carries statutory procurement preferences and potential exemptions from some National Industrial Security Program requirements.
Both Sides, Now
The CRS report on the National Technology and Industrial Base (NTIB) identifies options for Congress, including amending technology-transfer, domestic-preference and export-control laws, using the NTIB to expand cooperation on emerging commercial technologies, and directing the Department of Defense to better coordinate international defense cooperation mechanisms.
The report says U.S. domestic-preference laws, including the Buy American Act, the Byrnes-Tollefson Amendment, and small-business set-asides, may conflict with cross-border integration goals, and that export controls under the International Traffic in Arms Regulations (ITAR) may present another barrier, with Canada holding some licensing exemptions, the U.K. and Australia holding bilateral treaties with limited exemptions, and other members lacking uniformly available exemptions.
CRS also cautioned that expanding NTIB membership may require existing members' agreement, could complicate coordination, and may create unforeseen national security risks.
Whether President Donald Trump's administration's defense and acquisition policies will address the integration barriers CRS identifies remains unresolved.
What Happens Next?
Lawmakers have a few options, including changing the rules on sharing technology with allies, the laws that favor American-made products, and the limits on exporting defense technology. The fiscal 2026 defense policy bill tells the Pentagon to study whether Israel should join the partnership.
Will Congress act on the CRS recommendations before the gaps in allied defense integration widen further?
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