Former U.S. Export Official Says ITAR Rules Need Complete Overhaul

by

WASHINGTON — One of the architects of the U.S. regulations restricting the export of U.S. satellites and components now says the rules need a thorough overhaul because they are damaging U.S. industry with no corresponding benefit to U.S. national security.

Retired U.S. Air Force Col. David Garner, former chief of the Defense Threat Reduction Agency, said Feb. 21 that the people who rewrote the satellite-related portions of the International Traffic in Arms (ITAR) regulatory regime never imagined that the new rules would be applied the way they are.

The ITAR rules were revamped following a 1999 U.S. congressional order shifting licensing jurisdiction for communications satellite exports from the U.S. Commerce Department to the State Department. The shift was made in response to allegations that China was improving its missile technology by launching U.S. commercial satellites.

Garner, speaking at the Satellite 2007 industry conference here, said those who helped update the ITAR regulations had no intention of placing almost all satellite systems and components on the State-controlled U.S. Munitions List of material to be considered equivalent to arms for export purposes.

“We didn’t get it right,” Garner said. “In our defense, we never wanted to control [satellite] parts and components.”

Garner said the ITAR rules today constitute a minefield for companies seeking licenses to deal with non-U.S. entities to export satellites or related components. He said the regulations can be tamed, but only at great financial cost. Smaller companies, he said, face a daunting task.

Garner said the political climate in Washington may now be favorable to the creation of a special commission appointed by the U.S. president to examine export controls. “It really is time for serious reform,” he said. “If not, our good friends across the Atlantic will continue to beat the … out of us.”

Anthony Dearth, acting chief of the missile and spacecraft division in the State Department’s directorate of defense control licensing, said his team of export license reviewers has worked through a “horrible backlog” of license requests from companies, having hired additional staff in 2006. He said the open caseload, which stood at 11,000 in October, was down to 5,400 as of Jan. 1.

Making mandatory the use of electronic license filing also will help streamline the process, Dearth said, adding that a special effort is being made to clear the backlog of what he called “dinosaurs,” meaning license applications that had been awaiting review for months — some as long as four years.

Dearth conceded that, human nature being what it is, license reviewers often deal with the easiest, most straightforward cases first to clear their desks of the backlog. “Space is considered hard,” he said.

Dearth said licenses for radiation-hardened satellite components have taken too long to be processed, with the State Department reviewers failing to keep up with the evolution of the technology. Radiation hardening, once considered the preserve of military programs, is now becoming standard on many commercial satellites.

Dearth also agreed that otherwise straightforward licenses may be slowed if the U.S. company is requesting work to be done with, for example, a European contractor that has done work with firms that in turn are doing business with entities barred from receiving U.S. satellite technology.

“European companies are making money” doing business with Chinese aerospace firms, Dearth said. “In some cases, they are helping the Chinese, working with fellows we wouldn’t let you work with.” This makes it difficult for the State Department to grant regional waivers for certain ITAR restrictions.

Several industry representatives said their companies have lost business to European and other companies because they could not effectively compete under the weight of ITAR.

Joe Ramos, manager of business development at ATK Space Systems , said ATK used to be a global market leader in precision satellite antenna reflectors. ITAR-related restrictions reduced ATK’s effectiveness in Europe and stimulated the creation of a European competitor that now competes head-on with ATK for market share. The damage done to ATK has been mitigated only because of the drop in the value of the U.S. dollar compared to the euro, which makes U.S. products less expensive for European customers.

Many ITAR consequences are difficult to quantify. Earlier in this decade, Boeing Satellite Systems of El Segundo, Calif., and India’s Antrix Corp. had been prepared to form a joint venture to produce small commercial telecommunications satellites. The idea was dropped because of ITAR restrictions. Since then, Astrium Satellites of Europe has struck a nearly identical deal with Antrix and is now competing in this segment of the market — principally against Orbital Sciences Corp. of Dulles, Va.

Canadian satellite-fleet operator Telesat Canada has said ITAR restrictions are one reason the company has selected European satellite builders in some recent competitions. Telesat Chief Executive Dan Goldberg said Feb. 19 that as far as ITAR is concerned, “Canada is a very foreign place indeed.”

Large aerospace companies with teams of export-control experts have been able to negotiate ITAR to minimize its effects. But even larger companies like satellite-fleet operator Intelsat find ITAR rules difficult. Kent Bossart, director of trade compliance at Washington-based Intelsat, said Intelsat has four people working full time on export compliance.

“Only companies with a big, dedicated staff” can contend with ITAR and the related Technical Assistance Agreements needed to work internationally in the satellite sector, Bossart said.

“The Mom and Pop shops that want to go global — no way,” Bossart said. “You need a full-time staff that totally geeks out on this stuff in order to work through it, and the staff needs to be in Washington.”