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The Trade Numerologist: Rising weapons trade is too opaque

31 January 2018 John Miller

The Trump administration is expected to soon announce new government-backed strategies for boosting US weapons sales, according to news reports.

The policy change would downplay human rights considerations, and the murderous impact of the weapons trade, and give more consideration to the potential benefits to American jobs, and manufacturers of machine guns, fighter jets and drones. Staff at US embassies around the world would even be tasked with keeping tabs on military tenders and briefing visiting US officials

Already, foreign weapons sales have been increasing under President Trump, rising to $42 billion in 2017, from $31 billion in 2016, according to the US Defense Security Cooperation Agency, increasing the profits and stock market values of companies like Lockheed Martin, Boeing, Raytheon, General Dynamic Corp, and Northrop Grumman.

Behind all this spending is the appetite of governments, militia groups and private citizens, especially in the Middle East, to defend themselves in an unstable and dangerous world. An estimated 2.3 million people have been killed in armed conflict since the Cold War. That violence has an estimated economic impact of over $10 trillion a year, or 10% of the total global economy.

International efforts to regulate the global weapons trade have been mostly fruitless. The US, like Russia and China, have not yet signed and ratified the 2014 United Nations-backed Arms Trade Treaty.

An analysis of reported customs data from IHS’ Global Trade Atlas suggests that weapons trade is increasing – singularly difficult to evaluate.

Total weapons trade, every 3 years, 2001-2016

2001$8.9 billion
2004$13.1 billion
2007$18.5 billion
2010$22.2 billion
2013$26.4 billion
2016$28.7 billion

Other surveys suggest that’s just a small part of what’s actually being shipped on boats and airplanes around the world. Annual arms purchases are estimated at somewhere in the neighborhood of $1.7 trillion a year, according to the Stockholm International Peace Research Institute. The hundred biggest companies in the world have sold over $5 trillion worth of weapons since 2002. When it comes to legally-registered weapons trade, the US is the world’s top exporter.

Top weapons exporters, first 9 months of 2017

US$3.7 billion
Italy$845 million
UK$815.6 million
Bulgaria$807 million
Israel$428.4 million
Germany$400.7 million
Brazil$394.7 million
Austria$390.5 million
South Korea$369.4 million
Spain$351.6 million

These numbers should be seen as a representative sample, instead of a complete picture. Global arms trade is cloudy. A Transparency International study estimated that trade in weapons accounts for around 40% of all the corruption in global trade.

Many arms deals come with tariff deals that exempt them from regular customs inspection. Some countries don’t include them in published customs data. Arms are often smuggled across borders. Weapons can be transshipped through a third country, or counted as something else. A tank, for example, might get shipped as a truck. Finally, because politicians often mandate that their defense departments buy weapons from manufacturers in their home country, contractors often figure out ways of importing parts, including many that are almost-made and require minimal transformation, but don’t get counted as weapons imports.

The main category of weapons that the US exports, and reports via its customs agencies, is bombs.

Top categories of US exports, 2016

Bombs, grenades, etc.$4.3 billion
Parts of weapons$461.8 million
Military pistols, revolvers, etc.$378.1 million
Sport shotgun, rifles$124.9 million
Revolvers, pistols$58.5 million

Three Arab countries are the US’s biggest customers, led by Saudi Arabia, which this past summer signed an arms deal worth a reported $350 billion over 10 years, including $110 billion in immediate sales.

Top destinations, US arms exports, first 9 months of 2017

Saudi Arabia$784.3 million
United Arab Emirates$610 million
Kuwait$302 million
Canada$221 million
Japan$181.7 million
Australia$153 million
South Korea$154 million
Turkey$150 million
Israel$116 million
Qatar$86.3 million

The US is also the world’s biggest importer of customs-reported weapons, thanks in large part to civilians buying revolvers from Austria and shotguns from Italy.

Top importers, fist 9 months of 2017

US$2.2 billion
UK$609 million
South Korea$350.7 million
Qatar$350.5 million
Indonesia$342 million
Canada$303 million
Australia$272 million
Germany$197 million
Turkey$193 million
Thailand$169 million

For business analysts, and shipping and logistics companies, the traffic in guns, ammunition, and other weapons remains one of the most enticing and murkiest parts of global trade, and most difficult, and morally-challenging, to evaluate as an opportunity-- and begs calls for more transparency.

The data is especially opaque in China, which has pledged to boost its military might as it increases its economic influence around the world. Although data indicates that the country exported only $95.9 million worth of weapons during the first nine months of 2017, SIPRI and other research groups estimate that the real total is much higher, especially when including shipments to Africa.

What topic would you like the Trade Numerologist to cover? Email with comments and questions.

The Trade Numerologist is IHS Markit’s unique weekly look at global trade by award-winning journalist John W. Miller, formerly of the Wall Street Journal, using proprietary numbers from IHS Markit’s Global Trade Atlas database, the world’s most complete and accurate set of trade numbers.



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