Conclusion
The U.S. space industry and its supplier base, which provides our nation with critical national security capabilities, survive in large part because of U.S. government programs. In light of significant spending constraints faced by the federal government, there is a renewed sense of urgency that the United States should reevaluate its export control system and trade promotion strategies in order to strengthen both our space industrial base and national security.
Numerous government, industry and research institutions have found that current export control policies negatively impact our U.S. businesses and national security.
While many members of Congress remain rightly concerned about ensuring sensitive U.S. satellite technology not fall into the wrong hands, many are also beginning to recognize the flaws in the current system that hamstrings the U.S. space industrial base. Members of Congress including long-time champion of export control modernization Rep. Howard Berman (D-Calif.), have become more and more interested in trying to find a new approach that balances technology protection while also allowing U.S. firms to compete abroad.
As Rep. Michael Turner (R-Ohio) put it during a 2009 House Armed Services Committee Strategic Forces Subcommittee hearing, “I hope, in a bipartisan way, our committee can work together on a pragmatic approach that strikes a balance between protecting our unique, advanced space technology and capabilities and promoting a viable defense industry that competes in the global marketplace.”16
Rep. Dana Rohrabacher (R-Calif.), who has backed legislation in support of satellite ITAR reform, has said, “America needs a vibrant aerospace and space technology industry. Everyone agrees ITAR reform needs to happen. We need to make sure that our high tech exports aren’t strangled by regulations.”19
In addition, in an August 2011 op-ed in the Washington Examiner, James Jay Carafano of the conservative Heritage Foundation argued that America was “forfeiting” its leadership in space due to excessive export controls. Carafano states that when satellites were moved to the USML, “In one stroke, Congress had managed to boost both our foreign satellite manufacturing competitors and China’s commercial space industry.”
American satellite manufacturers produce some of the most advanced technologies and highest quality products on the planet. Unfortunately, superior products alone will not enable U.S. industry to be the unquestioned market leader if industry’s ability to compete is constrained by inappropriate regulations and is not supported by U.S. trade policies.
It is the recommendation of AIA and many others that removing inappropriate market restrictions and providing critical U.S. government export promotion will position our satellite and space sector manufacturers to once again be second to none.
Appendix
Background and current status of export reform efforts
As former Defense Secretary Robert Gates remarked in an April 2010 speech, “The problem we face is that the current system—which has not been significantly altered since the end of the Cold War—originated and evolved in a very different era, with a very different array of concerns in mind.”20
During his 2011 Senate Armed Services Committee confirmation hearing, current Defense Secretary Leon Panetta also expressed similar views on export controls.21
To help policymakers more fully understand the current landscape of export control policies, it is important to review what led us to this point.
The current export control system was designed in the Cold War era when the United States was ramping up spending in order to become the global leader in innovation and high technology. During this period, from 1961 to 1989, U.S. spending on national security space alone rose from under $10 billion annually to over $40 billion.22 For much of this time it was a bi-polar world—the United States and the Soviet Union had the only major space programs, and stringent controls were essential to preventing our adversaries from benefiting from U.S. technological innovation. U.S. industry did not require exports for their survival as government spending provided ample business for both large and small firms.
With the end of the Cold War near, U.S. leaders—representing Republican and Democratic administrations—began to consider changes to the export framework that had dominated the post-war era. Presidents Ronald Reagan, George H.W. Bush and Bill Clinton all took steps to facilitate the export of U.S. commercial satellites, providing growth opportunities for the U.S. space industry.
In 1988, President Ronald Reagan lifted a ban on the use of Chinese launch vehicles for U.S. commercial communications satellites. In 1992, during the administration of George H.W. Bush, the State Department transferred jurisdiction of some commercial communications satellites to the Commerce Department.
From 1989 through 1996 Presidents Bush and Clinton made multiple “national interest” determinations allowing launches of commercial communications satellites on Chinese rockets and, eventually, Russian and Ukrainian launch vehicles.23
After a series of scandals related to allegations of Chinese access to U.S. high technology were uncovered in the mid-1990s, Congress created a committee in 1998 known as the Select Committee on U.S. National Security and Military/Commercial Concerns with the People’s Republic of China, commonly referred to as the “Cox Commission” in reference to its chairman, Rep. Christopher Cox.
The Cox Commission was responsible for investigating these incidents and ultimately produced a bipartisan report (a declassified version was released in May of 1999). The report detailed instances of Chinese espionage and attempts to obtain information on U.S. nuclear weapons.
The report also examined Chinese launch failures during the Bush and Clinton administrations. In these instances, Chinese rockets carrying U.S. commercial communications satellites failed and the U.S. firms that manufactured the satellites were asked to provide information in support of the Chinese accident investigation. The report explains how the U.S. firms provided information related to the Chinese rocket fairings and inertial control systems that could have been used to strengthen Chinese rocket—and ICBM—design capabilities. The Cox Commission’s investigation led to the inclusion of a provision—Section 1513—in the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999. Section 1513 moved control of all satellites and related technologies to the State Department’s United States Munitions List (USML), thereby making their export subject to more stringent controls as required under section 38 of the Arms Export Control Act.24
The report details that after the 1996 Chinese launch failure with the Intelsat 708 satellite on board, the commercial communications satellite’s electronic encryption boards were not recovered. It concludes that these boards were mounted close to the satellite’s hydrazine propellant tanks and were likely completely destroyed. The Commission specifically noted that, “…the National Security Agency remains convinced that there is no risk to other satellite systems, now or in the future, resulting from having not recovering the FAC-3R boards from the PRC.382.”25
The Strom Thurmond National Defense Authorization Act sought to ensure that U.S. space business activity not harm national security and most of its provisions related to the Cox Commission aimed to restrict the proliferation of missile technology to China. While the intent of those involved in the Cox Commission was to prevent export of missile and militarily sensitive technologies to China, the result was that all satellites—even commercial communications satellites and their component parts—are now part of an outdated system of export controls that hampers export even to close allies…a system that former Defense Secretary Gates has described as failing at the “critical task of preventing harmful exports while facilitating useful ones.”26
Impact Of The National Defense Authorization Act For FY 1999
Not long after all satellite technologies were placed on the USML, the U.S. global market share of satellite manufacturing revenue dropped precipitously.27 Many began to argue that changes in the law had gone too far. The Cox Commission was largely concerned about the transfer of sensitive high technology to China. However the resulting legislation ended up severely restricting the transfer of commercial satellite information and technologies abroad – even to U.S. allies.
Like all technologies captured on the USML, commercial satellites and related components are subject to a “one size fits all” control regime. Nuts, bolts, screws, hoses and other components indistinguishable from their commercial counterparts now require a State Department export license that prohibits retransfer to any party not accounted for in the original license and requires ongoing tracking of access to such items, no matter how innocuous. In contrast, foreign competitors are able to ship parts and components under minimal or no scrutiny because their governments treat them as commercial commodities. This lack of a level playing field creates compliance costs and delays that affect the competitiveness of U.S. manufacturers without commensurate benefit to U.S. national security interests.
Such drastic measures may have even been unintentional to many in Congress responding to the Cox Commission. In fact, a review of the Congressional Record during the passage of the Strom Thurmond National Defense Authorization Act shows that Congress was mainly concerned about protecting sensitive nuclear, missile and intelligence satellite technology. Yet, by placing commercial satellite technology on the USML, Congress inadvertently put a clamp on the ability of U.S. industry to compete overseas for non-sensitive commercial satellite sales. Today, such outdated restrictions have unintentionally damaged U.S. security by impairing the vitality of the U.S. space industrial base.
In 2008, after years of concern voiced by the space industry that the law required unnecessary regulation of benign technology, the Center for Strategic and International Studies (CSIS) released a report that laid out how U.S. space firms were struggling under needlessly restrictive export regulations. According to the report, the United States is the only country today that classifies commercial communications satellites as munitions. Further, outdated export controls were cited as the number one barrier to foreign markets by industry. In the report CSIS shows that the United States held 73 percent of the worldwide share of satellite exports in 1995—this fell to a staggering 25 percent by 2005.
One of the most disturbing trends identified by the CSIS study was that export controls are particularly suffocating to the 2nd and 3rd tier of the space industry. The study detailed hundreds of millions of dollars in lost sales attributed to ITAR licensing.
Multiple reports and other public statements on satellite export restrictions paint a clear and comprehensive picture that the National Defense Authorization Act for Fiscal Year 1999 went too far (for a comprehensive guide to these studies, see the appendix section of this article).
As U.S. firms became restricted by heavy export control restrictions, their ability to access global markets decreased, thereby limiting available funds to invest in new commercial systems. At the same time, European space investments actually increased to develop new commercial satellite systems. According to the Commerce Department, “there has been little innovation in satellite busses by U.S. manufacturers after the change in export controls in 1999.”28 While some of this data may reflect fluctuations in the market for GEO satellites, it is possible to argue a relationship between changes in the law and U.S. satellite market share.
The impact on the industrial base may have not been realized due to a post-9/11 increase in government funding for space programs that sustained much of the industrial base. However, with current federal budgets projected to be flat or declining in many areas, the need to find ways to strengthen our commercial satellite sector while maintaining stable investments in federal space programs could not be greater.
Congress has begun to recognize the necessity of legislative action. In 2010, Rep. Howard Berman (D-Calif.) introduced H.R. 2410 with the goal of providing flexibility to commercial satellites and related components under the USML. In 2011, Rep. Berman also introduced H.R. 3288, Safeguarding United States Satellite Leadership and Security Act of 2011, to continue efforts to strengthen and modernize satellite export controls.
Export Reform In The Obama Administration
Calls to reform the export control system are made not just by the space industry, but by a broad range of technology sectors. To help modernize what most regard as an antiquated and largely ineffective system, President Barack Obama, in August 2009, directed an interagency review of the U.S. export control system writ large. This review would take a comprehensive look at weapons and dual-use technologies. The administration’s goal was to determine how to strengthen national security and competitiveness of key U.S. manufacturing and technology sectors by focusing on current threats, as well as adapting to the changing economic and technological landscape that provides security, economic and foreign policy benefits from technology trade.
The administration’s review determined that the current U.S. export control system—for all technology sectors—is “overly complicated, contains too many redundancies, and, in trying to protect too much, diminishes our ability to focus our efforts on the most critical national security priorities.”29 As a result, the administration launched an effort known as the Export Control Reform Initiative (ECR). This ongoing effort will review the current U.S. export control system and make changes that are “designed to enhance U.S. national security and strengthen the United States’ ability to counter threats such as the proliferation of weapons of mass destruction.”30
The U.S. government currently maintains two different primary control lists, the Commerce Control List (CCL) and the United States Munitions List (USML). The lists are administered by two different departments and hold different structures, different levels of specificity and different definitions. The CCL notably offers varying levels of control requirements while the USML has a “one size fits all” approach demanding significant pre- and post-shipment compliance activity. The CCL also itemizes technologies on the list while the USML uses broad definitions of what is captured on it.
The administration plans to conduct the ECR Initiative in three phases. Phase I seeks to develop the methodology for building new control lists that are “positive lists,” which describe controlled items using objective criteria (horsepower, speed, accuracy, or other precise descriptions). In phase II, the administration will restructure the USML and CCL into lists that apply varying degrees of control depending on the item. A new section of the CCL will be established to hold essentially commercial/dual-use formerly USML items. A “bright line” process will end jurisdictional disputes over an item by clearly identifying whether that item should be on the USML or CCL. These initial phases will be conducted by the Executive branch with Congressional consultation.
As part of phase III, both the USML and the CCL will be combined into one list falling under the jurisdiction of a Single Licensing Agency (SLA). An SLA will streamline the review processes and ensure export decisions are predictable, efficient and transparent.
As part of ECR phase I and II, the administration is looking to find ways to focus controls around those technologies that pose the most significant threat to national security. In the words of the administration, the aim is to build “higher fences around fewer items.”31 In addition, as part of these reviews, U.S. government departments and agencies are looking at all the categories of the USML to determine which items should be subject to USML or CCL control. Spacecraft systems and associated equipment are part of USML Category XV. Adjustments to Category XV, unlike every other category on the USML, will require legislative action to amend the Strom Thurmond National Defense Authorization Act and return discretion to determine the jurisdiction of this technology to the administration.
Largely due to the growing chorus of concern that overly restrictive export controls were impacting U.S. security, the Fiscal Year 2010 National Defense Authorization Act—signed into law in 2009—included Section 1248, which tasked the Departments of Defense and State to evaluate the national security risks of removing space components from the USML.
The report will better inform Congress regarding the commercial space technologies that would be appropriately controlled under the CCL. The 1248 report will be incorporated into the Obama administration’s National Space Policy. The Policy contains a section on export modernization, stating that departments and agencies should “seek to enhance the competitiveness of the U.S. space industrial base” consistent with the results of the ECR Initiative.
By taking such a position, the White House and its National Security Council staff were deferring to the ECR Initiative for final word on export control recommendations related to space. Former National Security Council director of space policy, Peter Marquez, stated that “When that export policy gets announced, it will supersede the portions of this space policy dealing with export control.”32 When this AIA article went to publication, the results from the ECR Initiative’s Category XV review or the 1248 report had not yet been publicly released.
What the interim 1248 report does provide is an initial conservative assessment of satellite systems and components that could be removed from the USML. The interim study did find that commercial communications satellites, along with most of their components, could be appropriately moved from the USML to the CCL without posing an unacceptable national security risk.
In addition, the interim study concluded that the President of the United States should be provided “with the authority and flexibility to determine the export licensing jurisdiction of satellites and related components”.33 It is important to note that in the preliminary 1248 report and in proposed rules supporting the ECR Initiative, the administration is not advocating any changes to current technology transfer policies with respect to China.
National Export Initiative
On March 11, 2010, President Obama signed an executive order creating the “National Export Initiative (NEI).”34 This initiative recognizes the loss of jobs incurred by the recent economic and financial crisis and is designed to help stimulate job growth by bolstering the private sector’s ability to export, with the goal of doubling exports over five years. In order to accomplish this goal, the administration’s initiative seeks to remove trade barriers by helping U.S. firms—especially small businesses—conduct business abroad.
The administration’s NEI represents a potential opportunity for many small U.S. space firms to take advantage of trade missions and U.S. government advocacy. Currently, space firms have not been a prominent component of the NEI due largely to the export restrictions that remain in place. However, if the right reforms were made to the current export control system, a variety of small space industry suppliers would be better able to utilize the government resources offered through the NEI.
Some aspects of the NEI may even be appropriate to advance with selected space firms under the current export controls system. For example, if a U.S. firm is able to identify an export opportunity, the NEI has created a task force directed to work with lenders to deliver financing to small business exporters and expand business counseling on export finance programs. The NEI also seeks to educate small business exporters on market access issues, tools that could be used by some small space supplier firms to identify areas for exports.
A Synopsis Of Major Studies Calling For Satellite Export Reform
Numerous officials and reports have documented the impact of export restrictions on the U.S. space industrial base. Since the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 moved satellites to the USML, the following reports and groups have either captured the disastrous consequences of ITAR licensing on commercial satellites or have recommended changes to satellite export control regulations:
– 2000—Booz Allen & Hamilton Report; U.S. Defense Industry Under Siege—An Agenda for Change: “We estimate that this particular U.S. industry (communications satellite manufacturers) could lose up to $1 billion of sales annually if the export controls issues are not resolved.”35
– 2007—Institute for Defense Analysis Study; Export Controls and the U.S. Defense Industrial Base: “In interviews with individual firms it is apparent that companies are already being constrained in supply chain choices by export control restrictions. In some cases export control measures are actually encouraging R&D and capital investment overseas, as well as discouraging R&D partnerships with firms and the DOD.” The report goes on to cite the case of Canadian TELESAT as an example of a major customer permanently moving away from U.S. manufacturers after the change in export jurisdiction from CCL to ITAR.36
2007—U.S. Air Force and Commerce Department Defense Industrial Base Assessment—U.S. Space Industry: “…the U.S. share of satellite manufacturing has decreased 20 recent for all commercial communication satellites (COMMSATs) sales and 10 percent for geosynchronous orbit (GEO) COMMSATs since 1999.” “A Tier 2 company commented, ‘ITAR restrictions and limits are a major impediment to be able to respond to proposal requests and subsequently sell products in foreign markets.’ A Tier 3 company ‘...is withdrawing from the space business due to a sustained absence of profitability and a refusal of some foreign customers to procure equipment that requires U.S. ITAR licensing.’”37
– 2008—National Security Space Office Survey: A survey by the Defense Department’s National Security Space Office of nearly 200 small U.S. space companies found that 70 percent of those companies surveyed stated that ITAR restrictions inhibited their ability to compete for foreign business. More than 40 percent of companies cited ITAR restrictions for hiring difficulties. Many of the survey’s findings show that our U.S. small space businesses are the most vulnerable to fluctuations in government funding and compliance burdens.38
– 2008—Report to Congress of the Independent Assessment Panel on the Organization and Management of National Security Space: “A critical factor in the developing threat to U.S. space supremacy is the accelerating proliferation of space technology. The growth in international space design, production, and operations spurred in part by U.S. restrictions on the export of space technology [under the International Traffic in Arms Regulation (ITAR)] is leveling the playing field so that many nations now compete with the United States in space.”39
– 2008—Space Foundation Paper on ITAR and the U.S. Space Industry: “ITAR restricts the ability of U.S. firms to compete because foreign companies do not operate under equal restrictions. Technology remains on the USML, even when it is commercially available in other countries, because lists of critical U.S. military technologies are seldom updated.”40
– 2008—House Permanent Select Committee on Intelligence Report on Overhead Architecture: “Government and industry participants described how ITAR has motivated European companies to establish an international (non-U.S) collaborative R&D environment where ITAR-banned technologies are produced indigenously, thereby defeating the premise of ITAR.”41
– 2008—Center for Strategic and International Studies Study on the Space Industrial Base and Export Controls: “Export controls are adversely affecting U.S. companies’ ability to compete for foreign space business, particularly the 2nd and 3rd tier. And it is the second- and third- tier of the industry that is the source of much innovation, and is normally the most engaged in the global market place in the aerospace/defense sector.”42
– 2009—House Committee on Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade; Hearing on Export Controls on Satellite Technology: “Now, the space industry has made credible arguments that the International Traffic in Arms Regulations, known as ITAR, has hurt business and the space industrial base. This claim is echoed in private at least by the Intelligence Community who sometimes find it more and more difficult to source satellite-related equipment domestically.”43
– 2009—National Academies’ Beyond ‘Fortress America’ Report: “…the export control system enforced in the United States today has failed to evolve with changing global conditions, and now produces significant harm to U.S. military capability, to homeland security, and to the nation’s economic competitiveness.”44
– 2010—Annual DOD Industrial Capabilities Report To Congress: “In the vacuum left by U.S. companies in international markets, foreign firms have been energized to fill the void and even create “ITAR-free” products that have no U.S. components that might prevent exporting to third countries. The cost and difficulty of export licensing becomes a competitive disadvantage to lower-tier U.S. firms with fewer financial resources.”45
– 2010—Aerospace Industries Association Report, Tipping Point: “At a time when the U.S. government should be encouraging growth across all sectors of the economy, export controls are limiting growth in the space sector, especially among component suppliers. In the absence of a healthy, cutting-edge U.S. space industrial base our government may be forced into reliance on foreign suppliers for key components, accelerating the loss of U.S. leadership in space.”46
– 2011—Joint Defense Department and Director of National Intelligence National Security Space Strategy: “Export controls, however, can also affect the health and welfare of the industrial base, in particular second- and third-tier suppliers. Reforming export controls will facilitate U.S. firms’ ability to compete to become providers-of-choice in the international marketplace for capabilities that are, or will soon become, widely available globally, while strengthening our ability to protect the most significant U.S. technology advantages.”47
– 2011—Heritage Foundation Report “China’s Space Program: A Growing Factor in U.S. Security Planning”: “(The United States) is seeking to reform export controls and the International Trade in Arms Regulations, which have harmed the international competitiveness of American satellite manufacturers. These efforts, as long as they continue to address specific security concerns and do not slight the continued need to protect key American technology advantages, deserve support from Congress and Secretary of Defense Leon Panetta.”48
Endnotes
162009 House Armed Services Subcommittee on Strategic Forces hearing on the space industrial base: http://www.gpo.gov/fdsys/pkg/CHRG-111hhrg51763html/CHRG-111hhrg51763.htm
17Malenic, Marina “Congressman Calls For Satellite Acquisition Overhaul, Looser ExportControls,”Defense Daily, Nov. 19, 2008 http://findarticles.com/particles/mi_6712/is_34_240/ai_n31138460/
18http://washingtonexaminer.comopinion_columnists/2011/08america-forfeiting-its-place-space
19http://rohrabacher.house.gov/NewsDocumentSingle.aspx?DocumentID=112628
20http://www.bens.org/mis_support/Gates%2Export%20Speech%204-20-10.pdf (site appears to be down)
21http://armed-services.senate.gov/Transcripts/2011/06%2June/11-47%20-%206-9-11.pdf
22http://www.aia-aerospace.org/assets/aia_report_tipping_point.pdf
23http://www.house.gov/coxreport/pdf/ch9.pdf
24http://thomas.loc.gov/cgi-bin/bdquery/z?d105:h.r.03616:
25http://www.house.gov/coxreport/chapfs/ch6.html
26http://www.defense.gov/news/newsarticle.aspx?id=58830
27http://csis.org/files/media/csis/pubs/021908_csis_spaceindustryitar_final.pdf
28U.S. Air Force and U.S. Department of Commerce, “Defense Industrial Base Assessment:U.S. Space Industry Final Report,” August 31, 2007, p. 31 http://www.bis.doc.gov/defenseindustrialbaseprograms/osies/defmarketresearchrpts/exportcontrolfinalreport08-31-07master___3---bisnet-link-version---101707-receipt-from-afrl.pdf
29http://www.export.gov/ecr/index.asp
30http://www.export.gov/ecr/index.asp
31http://www.aia-aerospace.org/assets/Sec_1248_Report.pdf
32http://www.thespacereview.com/article/1660/1
33://www.aia-aerospace.org/assets/Sec_1248_Report.pdf
34http://www.whitehouse.gov/the-press-office/executive-order-national-export-initiative
35http://www.boozallen.com/media/file/80445.pdf
36http://www.acq.osd.mil/mibp/docs/ida_study-export_controls_%20us_def_ib.pdf
37http://www.bis.doc.gov/defenseindustrialbaseprograms/osies/defmarketresearchrpts/exportcontrolfinalreport08-3107master___3---bis-net-link-version---101707-receipt-from-afrl.pdf
38National Security Space Office, Barriers to Entry and Sustainability in the U.S. Space Industry, 2008
39http://www.armyspace.army.mil/ASJ/Images/National_Security_Space_Study_Final_Sept_16.pdf
40http://www.spacefoundation.org/docs SpaceFoundation_ITAR.pdf
41http://www.fas.org/irp/congress/2008_rpt/hrpt110-914.pdf
42http://csis.org/files/media/csis/pubs/021908_csis_spaceindustryitar_final.pdf
43http://foreignaffairs.house.gov/111/48443.pdf
44http://books.nap.edu/openbook.php?record_id=12567&page=23
45http://www.acq.osd.mil/mibp/docs/annual_ind_cap_rpt_to_congress-2010.pdf
46http://www.aia-aerospace.org/assets/aia_report_tipping_point.pdf
47http://www.defense.gov/home/features/2011/0111_nsss/docs/NationalSecuritySpaceStrategyUnclassifiedSummary_Jan2011.pdf
48http://www.heritage.org/research/reports/2011/08/chinas-space-program-a-growing-factor-inussecurity-planning
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About the Aerospace Industries Association
The Aerospace Industries Association was founded in 1919, only a few years after the birth of flight. The nation’s most authoritative and influential voice of the aerospace and defense industry, AIA represents more than 150 leading aerospace and defense manufacturers, along with a supplier base close to 200 associate members. AIA represents the nation’s leading designers, manufacturers and providers of:
– Civil, military and business aircraft
– Homeland and cybersecurity systems
– Helicopters
– Materiel and related components
– Unmanned aerial systems
– Equipment services
– Space Systems
– Missiles
– Aircraft engines
– Information technology
About the author
Mike Conschafter is Director, Space Systems at the Aerospace Industries Association (AIA). In this capacity, Mike coordinates space policy issues related to the Department of Defense, U.S. Air Force, Missile Defense Agency and other government organizations.
Before joining AIA, Mike advised U.S. Congressman Doc Hastings (R-WA) on defense, science, and energy affairs. In addition to his role as a policy advisor, he managed security and science appropriations for Mr. Hastings’ district in Washington state where he was instrumental in securing funding for critical DOD, Department of Energy, Department of Homeland Security and National Science Foundation programs. Mike also worked on issues related to DOE’s Hanford Site, the Pacific Northwest National Laboratory, and organized an annual series of briefings on DOE and National Nuclear Security Administration programs. Prior to his work in the House of Representatives, Mike served in the office of U.S. Senator Lindsey O. Graham (R-SC). He supported the senator’s commitment to defense and science issues, specifically related to DOE’s Savannah River National Laboratory and other state research organizations. During his tenure Mike led the creation of the Senate Hydrogen and Fuel Cell Caucus.
Mike holds a B.A. in history and political science from the University of North Carolina at Chapel Hill and completed post-graduate coursework at the National Defense University at Ft. McNair.
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Satellite Export Reform: Myths & Facts
MYTH: A recent uptick in U.S. satellite manufacturing revenue is a trend that clearly shows that the current export control system does not need to be changed.
FACT: The U.S. space industry—from top tier firms to suppliers—remains competitively disadvantaged by the current satellite export regime. The overall trend is clear—the United States held 73 percent of the worldwide share of satellite exports in 1995—this fell to a staggering 25 percent by 2005. This study and a myriad of others have shown that the current system is not optimized to allow U.S. firms to compete against their international counterparts. A 2011 review of the U.S. space industry by Futron clearly showed that the United States is falling behind in space competitiveness. As the space industry's main customer—the U.S. government—reassesses its spending priorities, many space and defense firms will require stronger international and commercial sales in order to survive. It is more important than ever for national leaders to address export control modernization.
MYTH: Removing satellites and related components from the USML will harm U.S. national security.
FACT: Sensitive satellite and launch technologies will certainly need to remain under strict export control of the USML. However, there are a variety of low/no risk commercial satellite systems and components—many of which are already available on the international market—that should be considered for control under the less restrictive CCL. As the National Defense Authorization Act for Fiscal Year 1999 moved all satellites and components to the USML, even commercial communications satellites and widely available subcomponents remain under munitions list export control. Preventing export of nonsensitive technologies actually results in damage to the U.S. industrial base, making our small businesses less competitive and potentially less able to meet the national security needs of the U.S. government. Clearly, we need a more nuanced export system for today's space technologies.
MYTH: Why modernize export controls for satellites now? The Europeans have developed their own capabilities and would not buy U.S. space products even if export controls were changed.
FACT: There are a variety of U.S. manufacturers that currently do business with European countries. These firms have unequivocally stated that the correct changes to the current export control system would benefit their business in Europe. Other companies are looking elsewhere for business—especially in the Middle East, where many countries' budgets remain stable and interest in technology is increasing. In South America, the Chinese have been reported to be aggressively pursuing satellite sales to Brazil, a country in which U.S. companies lack a substantial presence.
MYTH: Why should we be concerned about satellite export control modernization? Won't it just help large companies who win billions of dollars in U.S. government contracts anyway?
FACT: The large and small U.S. companies that comprise our space and defense industrial base are critical to U.S. national and economic security. Without these companies, we would not be able to lead the world in technology and would be unable to produce the systems needed to provide our warfighters with an edge on the battlefield. It is imperative that we protect sensitive technology from export, but it is similarly important for our security that we provide these firms with the tools needed to win export business against their foreign competitors. Export control modernization could arguably help U.S. second- and third-tier suppliers the most. These small businesses often lack the resources to manage the complicated and challenging export control regime. This causes many small firms to make the decision to stay out of the space market entirely or can cause significant sales losses among small firms that remain in space markets. A reinvigorated export control system would have immense benefits for the U.S. space industry, especially second- and third-tier small businesses.