ITAR Reform Bill Gets Mixed Reviews

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  Space News Business

ITAR Reform Bill Gets Mixed Reviews

By AMY KLAMPER
Space News Staff Writer
posted: 15 June 2009
10:45 am ET





WASHINGTON — Legislation designed to ease export restrictions on U.S. satellite technology is being welcomed by some industry advocates, but others note that the measure would not affect the current ban on trade with China and that the bill faces a tough road to passage.

The provision in the proposed Foreign Relations Authorization Act for 2010 and 2011, which passed the full House June 10, would give the executive branch authority to remove commercial satellites from the State Department’s U.S. Munitions List, thus freeing the technology from the highly restrictive U.S. International Traffic in Arms Regulations (ITAR).

Industry observers say the new presidential authority would benefit U.S. satellite manufacturers, who have struggled to maintain their share of the global market since Congress transferred oversight of all communications satellite exports from the Commerce Department to the State Department. Before that legislation was passed as part of the Strom Thurmond National Defense Authorization Act of 1999, the Commerce Department had export licensing authority over all but the most sophisticated commercial communications satellites.

“Granting the president the authority to remove satellites and related components from ITAR controls in certain circumstances should help produce a more nimble and productive domestic capability,” said Bob Dickman, executive director of the American Institute of Aeronautics and Astronautics here. Dickman said the U.S. export control regime is overly restrictive and affects products that no longer pose a threat to national security and are widely available on the international market. “This unintended consequence of current export control policy tends to disproportionately impact small firms that otherwise might generate the new jobs and export receipts our national economy needs now more than ever.”

Patricia Cooper, president of the Satellite Industry Association, a lobbying group here, said the legislation would offset the overly broad rules that have put U.S. spacecraft and component makers at a disadvantage in the global marketplace.

“This legislation will allow U.S. export policies to adapt to changes in satellite manufacturing technology, and focus on items that merit control,” Cooper said in a June 10 statement. “This legislation will enable even stronger U.S. satellite exports, reinforcing the American industrial position in the global marketplace and at home, and safeguarding both jobs and critical space technology for the nation.”

Others were less sanguine. Joel Johnson, executive director-international with the Teal Group Corp., a Fairfax, Va., consulting firm, noted that the legislation does not grant the White House jurisdictional discretion when it comes to China, the subject of a de facto ban on U.S. satellite technology exports. Allegations that China was benefiting militarily from launches of U.S. commercial satellites are what prompted Congress to transfer satellite export licensing jurisdiction to State in the first place.

“When you build a common satellite bus as standard for a series of six or seven satellites, you don’t know where they’re going to go,” Johnson said. “They might go to a Chinese launcher. So the only way a foreign buyer can protect themselves is to pick suppliers not controlled by the State Department.”

Moreover, the satellite provision includes language requiring the executive branch to provide the House and Senate Foreign Affairs committees 30 days’ written notice of plans to remove satellites or related components from the Munitions List.

“The president will have to convince the committees of jurisdiction that this is worthwhile to do,” said one congressional aide familiar with the legislation. “It’s going to be an involved and complicated process.”

Although the president would not be required to await congressional approval, in practice, it would be politically risky to move forward with removal of any satellite technology from the Munitions List without congressional approval.

Significantly, while the proposed legislation gives the president discretion to remove satellite technology and related items from the Munitions List, it does not mandate that they be subsequently placed on the Commerce Department’s Commerce Control List, which would require a Commerce Department license for export.

“There may be components that are no longer sensitive, and which don’t need to be controlled,” the congressional aide said. “But that’s something about which the administration will have to successfully persuade the committees.”

The bill faces an uphill climb in the Senate, which is preoccupied with hearings to confirm President BarackObama’s political nominees. Congress has not passed a State Department authorization bill since 2002, though lawmakers consider foreign relations authorization bills annually.

If the legislation ultimately becomes law, the executive branch would not be able to exercise its new authority for another 90 days. Congressional sources say the waiting period was inserted to allow the Defense Department time to complete a study of the implications barring from Pentagon contracts foreign companies that do space-related business with China. Observers say the study, mandated in the National Defense Authorization Act of 2009, is aimed at ThalesAlenia Space of France and Italy, which markets a so-called ITAR-free telecommunications satellite devoid of U.S. components and thus unaffected by U.S. export restrictions. ThalesAlenia Space in recent years has sold two full satellites and several satellite electronics payloads for launch aboard Chinese rockets.

The Thales marketing strategy worries some lawmakers, who see a need to prevent American satellite and component manufacturers from being further edged out of the international market.

“While their technology may not be quite on par with American products, it comes with none of the restrictions on selling to unfriendly nations,” Rep. Gerry Connolly (D-W.Va.), a member of the House Foreign Affairs Committee, said during an April 2 hearing on satellite technology exports. “So while we succeeded in preventing American companies from inadvertently providing technology to China or other restricted nations, we helped fuel our global competitors, some of whom do not share our concerns for supplying unfriendly regimes.”