Editorial | Make the Most of this Opportunity

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The U.S. State Department’s proposed revisions to export rules governing space technology will provide welcome — if long overdue — relief to an industry that since 1999 has suffered under an ill-conceived and hastily imposed congressional crackdown. 

But State’s reform architects, who by and large have done an excellent job on a tight schedule, still have some kinks to iron out, particularly in the area of hosted payloads. 

The draft amendment to the International Traffic in Arms Regulations (ITAR), published May 24, would remove a slew of space-related items from the U.S. Munitions List, a registry of ITAR-controlled military technologies, based on application and commercial availability. These common-sense changes, enabled by a 2012 law that restores the president’s authority to determine export jurisdiction for space-related items, will facilitate international trade in commercially available satellite technology.

As currently drafted, however, the rules would maintain ITAR’s strict controls on an important class of commercially hosted satellite payloads: those funded by the U.S. military. This is significant because most commercial satellites are launched aboard non-U.S. rockets, meaning ITAR would come into play in the majority of instances. 

It seems likely that a significant portion of Pentagon-funded hosted payload candidates belong on the Munitions List. But the designation should be based on the application, sophistication and availability of the technology in question, not the funding source, as specified in the draft rules. According to one expert, a hosted payload funded by a private company in hopes of attracting U.S. military business would not necessarily be subject to ITAR, but the exact same payload would be ITAR controlled if funded in any way by the U.S. Department of Defense. 

If the objective is to protect U.S. national security by restricting access to sensitive technology, assigning export jurisdiction based on the funding source makes no sense. Indeed, that formula defeats the purpose by maintaining an unnecessary barrier to projects that support the Defense Department’s mission. The cash-strapped Pentagon is gearing up to take advantage of low-cost hosted payload opportunities, but still faces a number of hurdles, many of its own making. The last thing it needs is a regulatory disincentive, however small it might seem.

Another technology area where the draft rules might fall a bit short is Earth observation, an international commercial market that has been dominated by European companies for more than a decade. In the so-called 1248 report that served as the guidebook for drafting the ITAR amendment, the State and Defense departments determined that certain remote sensing technologies could safely be removed from the Munitions List. The amendment is specific about which remote sensing capabilities would remain ITAR restricted, but industry officials say many are readily available outside the United States.

Other concerns with the draft rules have been raised by officials with the nascent suborbital and in-orbit satellite servicing industries.

On the whole, the proposed ITAR changes, which State hopes to finalize this year, represent a dramatic shift that will benefit the space sectors of the United States and its trading partners, with the notable exception of China. But there are some apparent flaws, and these need to be addressed — opportunities to rewrite national security regulations don’t come around every day. Industry will no doubt make its voice heard during the public comment period, and the result should be final rules that are clear, logically sound and tailored to today’s commercial space marketplace, not yesterday’s.