How effective is a Security of Supply Arrangement (SOSA) with the United States in the absence of a Reciprocal Defense Procurement (RDP) Agreement with that country?
Invariably, SOSAs that the U.S. has concluded with other countries have followed the conclusion of RDP Agreements with them, not otherwise. Along with Singapore and South Korea, India seems to be an exception in this regard.
The above question assumes significance in the wake of Indian Defense Minister Rajnath Singh’s just-concluded visit to the United States. The visit was marked by what is said to be a significant conclusion of a bilateral but “non-binding” SOSA, under which the United States and India agreed to provide reciprocal priority support for goods and services that promote national defense.
The Arrangement will enable both countries to acquire the industrial resources they need from one another to resolve unanticipated supply chain disruptions to meet national security needs.
Officials of both countries assert that the conclusion of the SOSA represents a pivotal moment in the U.S. – India Major Defense Partner relationship and will be a key factor in strengthening the U.S. – India Defense Technology and Trade Initiative (DTTI) and deepening cooperation between their respective defense industrial bases.
In fact, both U.S. Secretary of Defense Lloyd Austin and Rajnath Singh have applauded the conclusion of SOSA, saying “it will further integrate the defense industrial ecosystems of both countries while strengthening supply chain resilience.”
In effect, SOSAs are bilateral arrangements that allow each participant to request priority delivery for acquisitions from the partner nation’s industry, including direct purchases of final products and acquisitions of critical parts from lower tiers of the supply chain.
SOSAs are also said to “encourage partner nations to acquire defense goods from each other” and “promote interoperability” between the U.S. and its allies and partners.
In addition, if everything goes well as visualized under agreed terms, SOSAs “can add resilience to supply chains by helping identify alternative sources when a key supplier has reached its production capacity,” it is claimed.
With the addition of India, the U.S. now has as many as 18 SOSA partners: Australia, Canada, Denmark, Estonia, Finland, India, Israel, Italy, Japan, Latvia, Lithuania, the Netherlands, Norway, the Republic of Korea, Singapore, Spain, Sweden, and the United Kingdom.
Three Key Points Emerge From The List
First, apart from India, the other 17 happen to be close military allies of the U.S., either through NATO or through formal bilateral security ties. It may be argued that Singapore is not exactly a U.S. treaty ally, but in reality, it is much more than that, given the range and intensity of its security links in the Indo-Pacific region.
Secondly, the list has been expanding, but slowly, over the years. Denmark, Japan, Israel, and South Korea became America’s SOSA partners only in 2023, and now India has joined the list.
This means that some partners, despite their traditional close links with the U.S., took time for thorough debates among their strategic elites and industry captains on the pros and cons of developing this new relationship. In fact, this debate is still ongoing as far as South Korea is concerned.
Reports suggest that Korean industries are still discussing whether this agreement would promote industry-to-industry cooperation in addition to the existing government-to-government relationship. No wonder why SOSA is non-binding in nature.
Thirdly, and this is most significant, SOSA alone does not guarantee that foreign companies will be able to sell their products to their American counterparts. The reverse is equally true. What guarantees that is the Reciprocal Defense Procurement (RDP) Agreements, which the U.S. has with 28 countries.
In the absence of an RDP Agreement, no country is automatically qualified for the “Buy American Act” to be waived. For this, a U.S. regime must make special and exclusive decisions. Otherwise, this Act makes it mandatory for goods bought with federal funds to contain 75 percent domestic content.
The RDP Agreement also makes it possible for offers of evaluation of qualifying country-end products to be carried out without applying the price differentials otherwise required by the Buy American statute and the Balance of Payments Program.
In other words, a RDP Agreement provides a framework for interaction regarding market access and procurement matters. It also facilitates American companies setting up manufacturing bases in foreign countries.
That explains why, with the exceptions of India, Singapore, and South Korea, all SOSA partners have RDP Agreements with the U.S. Reportedly, South Korea is about to conclude this Agreement, though Koreans were fearing that their defense industrial base would be adversely impacted by the onslaught of American equipment, given that the RDPA calls for full reciprocal access to defense procurement.
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Votaries of the RDP Agreements argue that these would benefit the joint development and production of advanced defense technologies and platforms. They cite the example of Japan, which, subsequent to the signing of an RDP Agreement, is said to have seen many collaborations between U.S. and Japanese companies.
In fact, when the U.S. Defense Secretary visited India in June 2023, he advocated for the conclusion of both the SOSA and RDP Agreement. The American proposal was subsequently reiterated in the Joint Statement following Prime Minister Narendra Modi’s visit to Washington in the same month.
However, all this is one part of the story. The other part is that the real implementation of SOSA also requires some other facilitating measures, such as communication mechanisms, streamlining DoD (Department of Defense) processes, and proactively acting to allay anticipated supply chain issues in peacetime, emergencies and armed conflict. The DoD uses the Defense Priorities and Allocations System (DPAS) to provide priority support.
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Partners are also supposed to institute government-industry codes of conduct whereby firms agree to make every reasonable effort to provide priority support. Of course, participation in these codes of conduct is voluntary. Participating firms may offer their participation in a code of conduct as an indication of their reliability in providing defense goods and services to the Department of Defense and its contractors.
Besides, DoD program managers, contractors, and subcontractors acquiring materials and services from participating firms may request priority delivery for their contract, subcontract, or order when necessary to meet U.S. defense requirements.
In addition, program managers, contractors, and subcontractors may request assistance when acquiring an item from a firm located in a participating country but not participating in that country’s code of conduct. In such cases, the DoD will request the Ministry of Defense of the foreign country to ask the company to join its code of conduct or otherwise provide priority support for the U.S. defense order.
This being the case, it remains to be seen how many Indian defense companies are coming forward to sign such codes of conduct. This is all the more against a background that suggests that many agreements signed between India and the United States in recent years have not exactly fructified in realizing their true potential.
Bottlenecks
In fact, one of the major bottlenecks in the Indo-US defense cooperation so far has been the poor record of the Defense Technology & Trade Initiative (DTTI). Indians have been disappointed that while the Americans would like India to lessen its dependence on Russian arms, they never provided India with all the right incentives and tools.
The US has not done much on the transfer and co-development of high-end defense technology with India. Russia, or, for that matter, France and Israel, are not hesitant to co-produce military items in India.
With regard to the US, DTTI was supposed to be an enabler of the greater defense technology cooperation between the United States and India, but it has not been a happy story so far.
India and the U.S. had agreed to advance priority co-production projects, including jet engines, unmanned platforms, munitions, and ground mobility systems, under the U.S.-India Roadmap for Defense Industrial Cooperation. But things have been delayed.
Of course, there is a perception that India is equally responsible for these delays. As Indian-American strategic analyst Amit Gupta argues, technologically, while India wants the latest technologies for its armed services and would like to build these weapons systems domestically, it does not have the financial resources to pay for these systems or, arguably, the ability to absorb the latest technologies. Besides, not only is production marred by delays, but the procurement of weapons from foreign companies moves at a glacial pace and can take decades, thanks to many archaic rules and procedures.
In fact, Gupta seems to make a lot of sense when he argues that better weaponry does not necessarily mean better aircraft and submarines. What it requires is building up the fundamentals of the armed forces, which is cheaper and leads to combat effectiveness.
Therefore, he suggests that several medium-sized American companies can collaborate with the Indians to build items such as drones, decent assault rifles (since the factory that is supposed to produce Russian AK-203s is still not fully functional, and the Army was forced to import 73,000 Sig Sauer rifles from the United States), and night-vision equipment. These can generate greater confidence and create an environment conducive enough to go for bigger things in the future.
Viewed thus, SOSA is a welcome addition to the Indo-US pacts already agreed upon, such as the Logistics Exchange Memorandum of Agreement (LEMOA), Communications Compatibility and Security Agreement (COMCASA), Industrial Security Annex (ISA), and Basic Exchange Cooperation Agreement (BECA).
However, interoperability, making arms transfers easier, and paving the way for improved cooperation on innovation and joint production will depend on the two nations’ defense industries’ ability to overcome many bottlenecks, some regulatory and some political.
- Author and veteran journalist Prakash Nanda is Chairman of the Editorial Board – EurAsian Times and has been commenting on politics, foreign policy, on strategic affairs for nearly three decades. A former National Fellow of the Indian Council for Historical Research and recipient of the Seoul Peace Prize Scholarship, he is also a Professor at Reva University, Bangalore.
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