Editorial: Opportunity for Export Reform

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  Space News Business

Editorial: Opportunity for Export Reform

posted: 19 November 2008
02:48 pm ET






While boosting NASA’s budget and selecting its administrator are the most immediate space-related imperatives for President-elect BarackObama, they are by no means the only ones. In fact there are numerous issues to tackle, ranging from policies governing military and commercial space to the re-creation of a national space council to better coordinate and prioritize space activities across the federal government.

Of all these, perhaps none will be as important, or challenging, as overhauling an export-control regime that has stifled space commerce for nearly a decade – to the detriment of programs and companies both in the United States and abroad.
U.S.
satellite and component suppliers have been especially hard hit: Once dominant companies have been reduced to bit players; some have been shut out of promising markets entirely. The enterprise as a whole has suffered from limited opportunities for international collaboration and restricted access to what in some cases are the highest-quality and lowest-cost components and services available.

The
U.S.
government clamped down on space technology exports in 1998 amid allegations that two
U.S.
satellite makers unlawfully passed sensitive technology to
China
during the course of launch failure investigations. Congress passed a law shifting export licensing jurisdiction for nearly all
U.S.
satellite technology – regardless of its likely application or availability from non-U.S. sources – to the U.S. State Department, which administers the U.S. International Traffic in Arms Regulations, or ITAR. In addition to expanding the list of items subject to the restrictive ITAR regime, the government tightened its enforcement, which led to an overwhelmed system.

Congress’ stated intent in passing the law was to enhance
U.S.
security, and there can be little doubt that changes were necessary; while two specific cases triggered the crackdown, the ensuing months brought revelations of other instances in which
U.S.
space companies violated export rules in dealings with
China
,
Russia
and
Ukraine
.

But politics certainly fueled the controversy. It erupted in an environment of rancor between the Republican-led Congress and then-U.S. President Bill Clinton, a Democrat who – in a continuation of policies set in motion by his GOP predecessor – had been loosening restrictions on trade in commercial satellites. Though some in Congress and elsewhere clearly had genuine national security concerns with the policy direction, there can be little doubt that Mr. Clinton’s critics exaggerated the gravity of the export-rule violations to score political points against their adversary.

Regardless of motive, those who favored reclassifying commercial satellites as weapons failed to recognize or appreciate that much of the affected technology already was readily available outside the United States and that foreign companies – leery of being held captive to U.S. policies – would prove capable of cultivating their own sources for others.
China
, meanwhile, has won contracts to launch European satellites that contain no
U.S.
components – and thus are not subject to ITAR – and has become an exporter of satellite hardware.

Meanwhile, there is growing consensus that ITAR restrictions are damaging
U.S.
national security by weakening the domestic space industrial base – a trend that threatens to accelerate as
U.S.
defense and intelligence spending flattens out or even declines in the coming years. The incoming administration doesn’t have to take industry’s word for this: numerous military and intelligence officials – a group that tends toward indifference on matters affecting commercial space – have cited ITAR as a threat to suppliers of critical national security space hardware.

Despite near-universal agreement that ITAR as currently applied is slowly smothering the space industry, recent reform initiatives have at best brought change only at the margins. Large companies manage to muddle through, in part because they have the wherewithal to hire the expertise to navigate the process, but smaller companies continue to suffer badly. Potentially beneficial international partnerships, meanwhile, languish because of the difficulty of doing business with the
United States
.

President-elect Obama is aware of the problem: A space policy briefing released by his campaign in August says export rules have hurt
U.S.
industrial competitiveness and that his administration would review ITAR with particular focus on the restrictions it imposes on U.S.-built space technology.

That’s a good opening position, but the president-elect and his administration need to think bigger. ITAR’s expansion to cover virtually all space hardware and technology was mandated by law; it will take an act of Congress to remove widely available commercial space items from under that enforcement umbrella.

Winning passage of new laws, especially ones that are not driven by the annual budget process, is never easy, but as president, Mr. Obama will have a window of opportunity. Not only will his party comfortably control Congress for at least the first two years of his administration, but a very tough and longtime obstacle to export reform, Rep. Duncan Hunter (R-Calif.), is retiring in December. As chairman and more recently ranking member of the House Armed Services Committee, Rep. Hunter was adamantly opposed to export reform and in a good position to prevent it.

It remains to be seen whether the Democrat-led Congress is inclined to legislate new export rules for certain space technologies, but with determined leadership and prodding from Mr. Obama – who made keeping jobs in the
United States
a major campaign theme – reform certainly is possible. The question is whether the will exists to make it a reality.