US set to lose top-gun status in global arms trade

A new study says Asia-Pacific nations are ramping up their defense industries and will outspend America and Europe by the end of the decade.

By Bruce Kennedy Jun 26, 2013 7:30AM

US Navy aircraft carrier at sea (© Corbis)So much for beating swords into plowshares and spears into pruning hooks.

IHS (IHS) Jane's, the defense and security analysts, says global arms trade is entering a new phase of explosive growth. And it expects Asia-Pacific nations to outspend the U.S. and Europe over the next several years.

In a new study, Jane's reports that despite the worldwide economic downturn, exports and imports of arms among countries increased by 30% between 2008 and 2012 to $73.5 billion. If the current rate of spending continues, global defense trade will reach about $100 billion by 2018.

"Two things are happening: Budgets are shifting East, and global arms trade is increasing competition," said Paul Burton, a senior manager at IHS Jane's. "This is the biggest explosion in trade the world has ever seen."

The firm looked at 34,000 defense acquisition programs. Among its other findings:

  • Defense budgets in the Asia-Pacific region should outstrip those in the U.S. and Canada by 2021, rising 35% from current levels to $501 billion. Overall defense budgets around the world are also forecast to rise, reaching $1.65 trillion by 2021.

  • Israel should become the world's largest exporter of drones by year-end and is expected to sell twice as many drones as the U.S. in 2014.

  • Western Europe's share of the global arms and defense technology market declined from 34.5% in 2008 to 27.5% last year.

  • Arms and defense technology exports are up in the Asia-Pacific, with the region's global market rising to 5.4% last year, and many Asian nations doubling their exports.

  • China has gone from the 10th largest defense exporter in 2008 to No. 8 this year.

"China is decreasing imports as it improves its own industrial capabilities," noted Burton. "And while Beijing’s exports have doubled since 2008, South Korea's are up 688% putting it into the global top 20 with $753 million."

As for the U.S., the study says budget cuts and the military withdrawals from Iraq and Afghanistan may mean the end of U.S. dominance of the lucrative global arms market.

Reuters says U.S. defense companies like Boeing (BA) and Lockheed Martin (LMT) are approaching Japan, India and South Korea with offers "to make up for reduced spending in their Western home markets, but such deals tend to require investment in the buyers' defense industries."

"The big Western defense companies have no option -- export or shrink -- but this could be sowing the seed of their own demise," says Guy Anderson, IHS Jane's senior principal analyst. He also noted that even the U.S. is now importing "significant" amounts of foreign arms.

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Jun 26, 2013 10:48AM
But America has always been the global supplier of arms to our friends who later become enemies. We armed Iran in the Iran-Contra. We armed the Mujaheddin which later became Al-Qaeda. We gave weapons to Saddam during the Iran-Iraq war. 
Jun 26, 2013 10:57AM
America will always be number one is selling arms to Latin and South American countries dictators attempting military coups of democratically elected leaders or genocide on their own people (ex. Nicaragua, Guatemala, Panama, Ecuador, Bolivia, and many others)
Jun 26, 2013 11:01AM

The 'buy a dictator' business is heating up.

Jun 26, 2013 1:56PM
China stole TRILLIONS in intellectual property from the USA and will finally realize its dream of either dominating the world or destroying it. God help us all.
Jun 26, 2013 11:08AM
Could this be a shill for the defense industry? Who pays the defense analyst? The DOD and/or defense contractors, right? The same people that don't want cuts in military spending.
Jun 26, 2013 9:09AM

Gross domestic product grew at only a 1.8% rate, the Commerce Department says in its final estimate. Growth was previously reported to have risen at a 2.4% pace after stalling in the fourth quarter


summer of recovery!

Jun 27, 2013 10:21AM
I love the fools that blame Obama ? And the fools that blame Bush , Clinton ? G.H #41 Reagan ? Carter , Ford , LBJ , Kennedy , IKE . And so on ! ITS THE US CONGRESS IDIOTS . They are the money spenders POTUS rides on what the country needs at that time in History ! Back in IKE's days < A TRUE REPUBLICAN had his minions i.e the industrial military complex and congress tell him to build huge amounts of missiles because the USSR had twice as many as the USA. IKE Called on the U-2 and found out they had NO SUCH THING . He diverted them billions into the interstate freeway system LOL .. A TRUE REPUBLICAN ..Thinking about America and its people and the USA>>>>> True republican he was ..What they have today ? IKE and Reagan would PUKE At the GOP today .. Facts are facts . The USA Land of the free? Home of the broke.BTW Almost everything we use today in ships tanks jets are all UNION MADE LOL Go figure.< And they are the BEST IN THE WORLD..
Jun 26, 2013 11:16AM
"The government encouraged the manufacture and Importation of military firearms for criminals to use. This is intended to foster a feeling of insecurity, which would lead the American people to voluntarily disarm themselves by passing laws against firearms. Using drugs and hypnosis on mental patients in a process called Orion, the CIA inculcated the desire in these people to open fire on school yards and thus inflame the anti-gun lobby. This plan is well under way, and so far is working perfectly. The middle class is begging the government to do away with the 2nd amendment" Quoted from the book "The Secret Government " published in 1990
Jun 26, 2013 1:36PM
Lets face it S.E. Asia is home to china who is staging itself to take out any one who gets in its way. Of course those other nations are going to ramp up production and spending to keep them at bay. China is the new Japan so to speak it will start a war when it thinks it is immune to retaliation from the west.
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