Summary: This testimony looks at how eight European NATO allies--Belgium, France, Germany, Italy, the Netherlands, Portugal, Spain, and the United Kingdom--are implementing their reciprocal defense procurement memorandums of understanding with the United States. These agreements are intended to enhance alliance-wide military readiness by promoting rationalization, standardization, and interoperability of military equipment. The agreements also seek to promote competitive opportunities for the signatories' defense industries and reduce barriers like buy-national laws and tariffs. While the trade ratio for defense exports favored the United States by about eight to one in the late 1970s, that ratio had shrunk to two to one by the mid-1980s. GAO discusses (1) how the United States and the allies view and implement the memorandums of understanding, (2) whether the agreements provide opportunities for U.S. firms to compete freely and fairly in allied defense markets, (3) how allied governments' tariff practices affect contract selections, (4) allied contract-award grievance procedures, and (5) Defense Department efforts to monitor the memorandums of understanding.
