Government Shutdown Delayed New Satellite Export Regulations

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WASHINGTON — U.S. government officials expect to complete in early 2014 a final draft of regulations that will remove some satellite hardware and technology from the U.S. Munitions List, a registry of militarily sensitive technologies whose exports are tightly controlled by the U.S. Department of State.

The work had been expected to be completed by the end of 2013, but was delayed by the government shutdown in October, said Kevin Wolf, assistant U.S. secretary of commerce for export administration. Items removed from the Munitions List would be placed on the Commerce Control List, which is administered by the less-restrictive Commerce Department.

The new rules have been circulating in draft form since May. At a Nov. 18 panel discussion here sponsored by the Washington Space Business Roundtable, Wolf said he hopes to get the final drafts to Congress before the end of the year. 

The modifications are generally intended to remove the arms label from certain widely available space components that, since 1999, have been lumped into Category 15 of the U.S. Munitions List. Shifting licensing jurisdiction for those items to the Department of Commerce is expected to ease their export to 36 countries. 

The National Defense Authorization Act for Fiscal Year 2013 repeals a 1999 law that placed all space-related hardware and services, regardless of sophistication or availability, on the Munitions List. The new legislation gives the U.S. president the authority to determine licensing jurisdiction for space-related items.

However, exports of space-related items to China and certain other countries remain barred.

Wolf said one of the aims of the rules is to reduce disincentives for European space companies to buy from U.S. businesses. The reforms would also allow State Department officials to concentrate their limited resources on monitoring transactions involving the most sensitive technologies.

The changes, Wolf said, have been accurately described as “right-sizing” export controls in the satellite industry.

Once the new regulations are adopted, for example, more than 90 percent of the U.S. space-related items procured by Astrium, the European space hardware and services provider, will go through Commerce rather than State, said Corinne Kaplan, vice president of space at EADS North America. Astrium is a subsidiary of EADS, the Netherlands-based aerospace and defense conglomerate.

After an initial adjustment period, the new regulations are expected to reduce delays and uncertainty for overseas contractors that import U.S. space technology, Kaplan said. One key benefit is that many companies that previously were hesitant to upgrade products incorporating U.S. components because of the implications for export licensing procedures may be more open-minded, she said. 

“It’s going to be a lot more predictable,” Kaplan said.

Once the rules are approved sometime in 2014, Wolf said, there would be a 180-day waiting period before they go into effect, a delay that was included in part at the urging of the satellite industry.

Jim Stearns, regional trade compliance counsel for the Americas at Accenture, a global management consulting firm, urged space companies to spend the money on lawyers and staff to ensure that the new regulations are fully understood and properly followed. 

“If you get in trouble, it’s not a defense to say we didn’t want to put the people on board,” he said. “This is what we’ve been training for for many, many years.”

 

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