Satellite Export Reform Supporters See Glimmer of Hope

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WASHINGTON — Steep declines in U.S. defense spending coupled with the coming departure of one influential lawmaker have raised hopes among U.S. satellite export reform advocates that their cause will finally get traction in Congress.

The Budget Control Act of 2011 mandates that $487 billion be trimmed from planned U.S. Defense Department budgets in the next decade. Although Pentagon officials have said space will continue to see investment in the new budget environment, exports can help shore up an industrial base that has been a subject of concern for several years, industry observers said.

“The climate is probably the best that it has ever been in the 10 years or longer that the current legal regime was put in place,” said Brendan Curry, vice president of Washington operations at the Space Foundation, an educational and advocacy group based in Colorado Springs, Colo. In addition to the budget situation, the satellite industry has done a better job of making the case for export reform to a reluctant Congress, he said.

Another factor, some sources say, is the impending departure of Sen. Jon Kyl (R-Ariz.), who is retiring at the end of his term this year. Kyl has been among the biggest obstacles to reform in the decade since Congress ordered a crackdown on satellite exports.

Joel Johnson, executive director-international at the Teal Group Corp., a market research firm in Fairfax, Va., said Kyl’s departure could make it easier to pass reform, but others were more cautious. Curry, for example, suggested that other congressional opponents of export reform could step in to fill the void left by Kyl’s departure.

Satellite export reform was the subject of a Feb. 7 hearing of the House Foreign Affairs Committee during which witnesses spelled out some of the adverse impacts of the current rules, imposed by Congress in 1999 amid concerns that China was using launches of U.S.-built commercial communications satellites to improve its missiles. Under current U.S. law, satellites, regardless of their purpose, and their components are classified as weapons whose exports are licensed by the U.S. Department of State.

Marion Blakey, president and chief executive of the Aerospace Industries Association (AIA) here, said a recently completed survey of her organization’s member companies found that U.S. export policies have weakened and fueled overseas competition to America’s space component supplier base. At the hearing, the AIA released new details of a report based largely on that survey, including a finding that the export crackdown cost U.S. companies nearly $21 billion in lost revenue between 1999 and 2009.

The AIA report, originally released in January, said the export rules harm U.S. national security by eroding the industrial base for components used to build critical national security satellites. The report cited one study by the U.S. National Reconnaissance Office, which builds and operates the nation’s spy satellites, that said certain component suppliers have had trouble diversifying their customer base in part because of export control policies, a trend that could lead to satellite delays and compromise the availability of some components.

Patricia Cooper, executive director of the Satellite Industry Association here, said satellites are uniquely treated under U.S. law in that all of their components fall on the U.S. Munitions List, a registry of sensitive hardware and technology whose exports are licensed by the State Department. “The most mundane bolts are regulated with the same controls as the most sensitive imaging technology,” she said in prepared remarks.

Cooper urged Congress to remove that blanket categorization of satellite components and grant the White House authority to regulate satellite export controls. “The satellite industry will not reap the benefits of export control reform unless Congress passes satellite-specific legislation,” she said.

In the absence of such legislation, she said, the U.S. government will have to maintain separate a satellite-specific export control regimes, “the very redundancy and confusion that reform seeks to avoid.”

The administration of U.S. President Barack Obama is pushing a broad overhaul of the export control system that would reduce the number of items on the U.S. Munitions List and create a single licensing agency to handle duties now split between the U.S. State and Commerce departments. The administration also wants authority to determine which space-related items belong on the Munitions List and which can be removed.

Republican members of the House Foreign Affairs Committee voiced support for export reform in principle, but with reservations.

Rep. Ileana Ros-Lehtinen (R-Fla.), who chairs the committee, said some of the reforms proposed by the Obama administration have merit and that certain components such as nuts, bolts and cable could be removed from the Munitions List. But she said the main focus of the reform effort has been a “complete rewrite” of the U.S. Munitions List and the transfer of large numbers of items to the less-restrictive Commerce Control List administered by the Commerce Department.

Ros-Lehtinen said the White House is currently focused on what items should remain on the Munitions List rather than identifying to Congress the items it seeks to transfer to Commerce. Congress “will not accept unilateral actions that substantially infringe on or ignore congressional oversight over these important national security matters,” she said.

Rep. Edward Royce (R-Calif.) said there is bipartisan agreement that the current export policies are inefficient and that the U.S. economy is suffering as a result.

“The goal here in simple terms is to focus on the truly dangerous items,” Royce said. “And we have enemies determined to hurt us with our own technology. The challenge is establishing that focus, making a more workable system … bringing some measure of efficiency to this system. And we are operating in an ever-more-competitive and fast-paced world economy that, frankly, is leaving our bureaucracy behind.”