After a number of false starts dating back to the early 1990s, the Gulf Cooperation Council (GCC) could be on the verge of ordering a turnkey satellite reconnaissance system that could rock the foundations of U.S. and European export policies.

The GCC, a group of six Western-friendly Arab states that includes some of the world’s top oil producers, is seeking a system with capabilities never before exported by any country: an optical imaging satellite that can distinguish ground objects as small as half a meter across; and a radar satellite able to discern features 1 meter across and larger. Satellites in orbit today with those kinds of capabilities are owned exclusively by the governments of the countries in which they were built.

Just a few years ago, export rules would have denied U.S. industry a realistic shot at winning that business. In 2000, for example, U.S. government authorities, concerned about the commercial availability of 3-meter-resolution radar imagery from Canada’s planned Radarsat-2 spacecraft, forced Orbital Sciences Corp. to forfeit its contract to supply the satellite platform for that mission. In fact, for all of its capabilities, U.S. industry has largely been relegated to the sidelines in the international market for increasingly capable remote-sensing satellites.

This, of course, has not prevented such systems from proliferating. The Radarsat-2 program, for example, has gone ahead with an Italian-supplied spacecraft platform that is scheduled for launch next year. Imaging satellites — some with resolutions as sharp as 1 meter — have been built or are under construction by European companies for countries including Taiwan, Thailand, South Korea, Nigeria and Algeria. Europe, meanwhile, plans to market data from its own high-resolution radar imaging satellites, including Germany’s TerraSAR-X.

The GCC program offers fresh evidence that the U.S. government is finally awakening to this reality: Raytheon Intelligence and Information Systems has secured permission from U.S. export authorities to bid on that contract, which has an estimated value of $700 million. Raytheon, whose partners include Ball Aerospace and Canada’s MacDonald Dettwiler & Associates, is competing against a European team led by Alcatel Alenia Space of France and Italy.

In an indication that export uncertainties reside on both sides of the Atlantic, one early contender for the GCC contract, Astrium of Europe, is no longer in the competition. According to an industry source, Astrium’s bid was undermined in part because of concerns about its ability to get the necessary government approvals.

From the U.S. side, Raytheon’s continued presence in the bidding is qualified good news: Perhaps the U.S. government is beginning to realize that its strict export rules have accomplished little other than to deny U.S. companies access to a growing market. But it is anybody’s guess as to how Washington will react if the GCC proves resolute about buying a system and remains adamant about its capabilities.

Having let Raytheon get this far, the government has a responsibility not to pull the rug out if the GCC, in effect, calls its bluff. After all, bidding on complex satellite programs costs money.

That said, the U.S. government is under no obligation to approve a system that adheres to the GCC’s exact specifications. Under the U.S. Commercial Remote Sensing Policy of 2003, exports of satellite imaging technologies readily available from non-U.S. providers are to be considered favorably, but what the GCC wants does not fall into that category. It fits more neatly into the class of sensitive systems whose exports, the policy states, “will be approved only rarely, on a case-by-case basis.”

European companies have every right to take advantage of overly strict U.S. export-control rules, and have done so in recent years. But Europe, whose remote-sensing capabilities have improved dramatically, has as much at stake as the United States these days in safeguarding the most sensitive space technologies. It stands to reason that the line between what can and cannot be sold internationally be drawn based on broad strategic and economic conditions, not in the heat of a competition for one contract.

Given the potential precedent-setting nature of the GCC program, U.S. and European government authorities should negotiate an ad hoc understanding of how far their respective industries will be permitted to push the technology-export envelope to win the competition. More broadly, it is high time that the two sides try to negotiate a common technology export regime for space-related hardware and services — one that can be revisited regularly or as dictated by changing global conditions.