Editorial: A Compelling Case for Reform

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Given all the data feedback on the U.S. export licensing crackdown imposed by Congress more than a decade ago, and with the U.S. space industry reeling from a slowdown in government spending, it was a bit disconcerting to hear a prominent U.S. lawmaker sound an almost dismissive note about the urgency for export reform.

Rep. Ileana Ros-Lehtinen (R-Fla.), who chairs the House Foreign Affairs Committee, insists that advocates for overhauling the export licensing system, including the administration of U.S. President Barack Obama, have yet to make a compelling case for the cause. She didn’t refer specifically to satellites during a May 12 hearing on the matter, but the fact is that communications satellites have long been at the front and center of the export debate and should figure prominently in any reform effort.

U.S. companies dominated the global commercial satellite manufacturing market during the mid to late 1990s, a boom period that helped offset flat to declining defense and NASA spending while bringing in a steady stream of foreign export currency. Congress clamped down in 1998 amid allegations that China was benefiting militarily from launching U.S.-built satellites, passing a law that effectively reclassified even the most widely available U.S. commercial satellite technology as weaponry for export licensing purposes.

Since then the U.S. share of the global market has eroded — although this cannot be pinned solely on the export crackdown — as European and Asian companies have narrowed the technology gap. Even China has emerged as a satellite-making competitor, and has racked up an impressive reliability record for its Long March rockets despite being barred from launching any satellite containing U.S.-built hardware.

In recent years Defense Department officials have argued that the export rules, ostensibly designed to enhance U.S. national security, have in fact had the opposite effect by weakening the nation’s space industrial base. The affected companies are not just the satellite makers, but also the suppliers of components used not only on U.S. military spacecraft but also on the vast majority of satellites built in Europe.

Most recently, an interim report prepared by the U.S. State and Defense departments concluded that export licensing jurisdiction for most commercial communications satellites and related components could be transferred from State to Commerce department jurisdiction without harming national security. The risks associated with taking these items off the State-controlled U.S. Munitions List are “manageable from a national security perspective, with a few narrowly defined exceptions,” states the interim report, released May 6.

Meanwhile, as Rep. Ros-Lehtinen, being from Florida, might have noticed, the U.S. space industry has entered what looks to be a painful downsizing period. The surge in defense spending over the last decade took much of the sting out of the export crackdown; U.S. space companies enjoyed robust growth largely on the strength of Pentagon demand. But those days are coming to an end, as is NASA’s space shuttle program, which at its peak employed some 18,000 workers. Layoffs are either looming or in full swing at some of the top U.S. space companies.

Some satellite makers say they intend to focus more attention on the commercial market now that government spending is drying up. No one would suggest that the commercial space market can offset a major portion of the inevitable government spending decline, but anything to cushion the blow, especially something as long overdue as export reform, would be helpful.

Rep. Ros-Lehtinen said the comprehensive overhaul being pushed by the White House goes too far, and that she would introduce legislation this year featuring more modest, targeted reforms that can be implemented relatively quickly. She should start with one of the easier ones: commercial communications satellites and related components.

The Pentagon and State Department agree that shifting most of this hardware to Commerce Department jurisdiction would have no ill effects on national security — never mind the evidence that it could actually enhance security — and the White House has given every indication that it is on board. If there were ever an area ripe for what Rep. Ros-Lehtinen characterized as “common sense reforms upon which we can all agree,” this is it.