Pessimism Greets Attempts At U.S. Export Regulation Reform

By Frank Morring, Jr., Amy Svitak
Source: Aviation Week & Space Technology

“We would feel comfortable launching some satellites on Chinese launch vehicles, but it is not an avenue we can pursue,” says Jean-Luc Froeliger, vice president for operations and engineering.

Instead, Intelsat buys its satellites in the U.S. and Europe, and launches them on European and Russian launch vehicles. Because they are focused on government launches, Froeliger says, U.S. launchers usually cannot compete on cost, although Intelsat has a contract with SpaceX for a Falcon 9 launch in a few years.

While the main ITAR impact on Intelsat has been in its launch and satellite procurements, the U.S. regulations also affect operations in ways that illustrate the Catch-22 nature of their enforcement. Most of Intelsat's ground stations use baseband processors manufactured in France by Zodiac Data Systems. If the French company ships a unit directly to an Intelsat ground station in South Africa or Australia, there is no problem. But if the unit passes through the U.S. en route to its final destination, it must get State Department clearance for re-export, Froeliger says. U.S. satellite builders must get an export license to return a component manufactured abroad to its factory for repairs or modifications.

Congress, which ordered satellites components onto the munitions list in 1998, removed that requirement in the fiscal 2013 defense authorization bill. That gives the president the authority to decide which satellite components should continue to be treated as munitions, and which can go back to the less stringent Commerce Department regulations.

Beth M. McCormick, deputy assistant secretary of state for defense trade and regional security, says overall the reviews necessary to shift some military technology export licensing from the State to the Commerce Department are going well. But the process is cumbersome, because the so-called “ITAR reforms” ordered by President Barack Obama in 2009 are as comprehensive and complex as the regulations themselves.

Proposed changes in the rules for all categories in the U.S. munitions list of ITAR-covered technology should be ready by the end of this year, says McCormick. Comments on previously announced Category XV—spacecraft systems and associated equipment—closed on July 8.

“Hopefully we can turn XV around quickly, although I have to say after seeing some of the public comments, I'm not sure,” she adds.

Many of the technical experts who evaluate ITAR license requests are Defense Department employees subject to “furlough days,” when they must stay at home without pay to stretch funding. McCormick, herself a Pentagon detailee, says the reviews are being conducted in parallel with regular licensing activities by the same personnel, which further slows the work.

In practice, ITAR controls probably have not been as hard to follow as the satellite industry has made them out to be, and Commerce Department oversight probably will not be a panacea. Kevin J. Wolf, assistant commerce secretary in the Bureau of Industry and Security, told Congress in April that the technologies transferred to the CCL will be subject to “tailored controls” on their export.

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