Editorial: The TAS Investigation and Export Reform

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The impasse between Thales Alenia Space and the U.S. State Department over the latter’s request for detailed design data on the company’s so-called ITAR-free satellites — meaning satellites devoid of components subject to the U.S. International Traffic in Arms Regulations (ITAR) — should not weigh against the technology export licensing reforms being pushed by the White House. These reforms are vital to the health of U.S. satellite and satellite-component makers, who face not only a decline in U.S. government business but a slowdown in commercial orders as well.

Since 2008, State has been investigating whether Thales Alenia Space (TAS) of France and Italy has been illegally shipping U.S. satellite hardware to China for launch aboard Long March rockets. U.S. policy bars the transfer to China of space-related components on the U.S. Munitions List, whose exports are licensed by State based on the ITAR rules. The satellites in question are billed as ITAR-free, which in theory means they are not subject to that policy. But State officials were unconvinced about that claim and launched what is known as a “Blue Lantern” investigation.

TAS insists that in response to State’s initial inquiry, it provided a full accounting of the ITAR-controlled items it has purchased and established that none found their way into satellites shipped to China. The company also says it has strengthened its screening process for hardware items purchased from third parties to determine whether they contain restricted U.S. components.

State responded by broadening its probe, the company says, requesting detailed design information on the ITAR-free satellites and a list of all of the components they contain, regardless of origin or export-licensing classification. TAS has balked at that request, saying the data are proprietary and that handing them over would violate French law.

The investigation has gotten the attention of three U.S. lawmakers, who recently wrote U.S. Secretary of State Hillary Clinton to express frustration over the stalemate and push for a prompt resolution. The letter, a redacted version of which was made available to news media, betrays an unfortunate presumption of guilt: “Given that this investigation has been open since 2008, and State Department personnel appear to have concluded that there is a high probability that TAS illegally exported ITAR-controlled technology to China, when does the Department expect to take a final action which, under law, may include a denial of any licenses for the export of United States Munitions List (USML) technology?” the letter said.

The letter’s authors, Reps. Ileana Ros-Lehtinen (R-Fla.), Michael Turner (R-Ohio) and Frank Wolf (R-Va.), all hold influential positions in the House. Rep. Ros-Lehtinen chairs the House Foreign Affairs Committee, through which any satellite-related export reform legislation must pass; Reps. Turner and Wolf chair the House Armed Services strategic forces and House Appropriations commerce, justice, science subcommittees, respectively.

By developing an ITAR-free version of its geostationary communications satellite platform, TAS has been able to land business with customers either based in China or who choose to launch on relatively low-cost Long March rockets. This business is in most instances unavailable to U.S. and other European manufacturers that rely on U.S. components.

ITAR-free satellites are a sore spot among U.S. companies, whose heartburn likely will grow as the product catches on with non-Chinese customers like the government of Turkmenistan, which ordered one last year. U.S. lawmakers, meanwhile, have complained that TAS is undermining a U.S. policy intended to deny China access to Western space technology and launch business. TAS is not necessarily beholden to U.S. policy, of course, but lawmakers see both irony and leverage in the fact that one of its parent companies, Thales Group of France, does considerable business with the U.S. Department of Defense.

Reps. Ros-Lehtinen, Turner and Wolf were clearly dismissive of the possibility that an ITAR-free satellite is available on the market, characterizing it as a “misperception” that is of concern to U.S. industry. U.S. government officials have a history of underestimating the technical prowess of other countries, however, and at any rate, that’s something for the experts at State to determine as the investigation runs its course.

So far, State has produced no public evidence of wrongdoing on TAS’s part other than to accuse the company of not fully cooperating with its investigation. Thales for obvious reasons is eager to reach a compromise on the data, but the company cannot simply shrug off French law.

One possibility not raised by the lawmakers is that the satellites in question contain U.S. components that are not on the U.S. Munitions List. If that’s the case, the ITAR-free label remains legitimate, unless of course the U.S. government then decides to expand the Munitions List to include every widget that could possibly go on a satellite — an untenable proposition.

In fact, the administration of U.S. President Barack Obama is trying to do just the opposite and has the full support of industry in this endeavor. The long-overdue overhaul of U.S. export rules appears to have gotten some traction — industry officials are more optimistic than they have been in years — but Congress has yet to fully embrace the idea. Change never comes easy, especially in an election year, but if Congress really wants to do right by the space industry it should get behind reform. The disagreement between TAS and State is an entirely separate matter that should have no bearing on that process.