Often seen as a governmental slough of despond, the ongoing failure to rationalize U.S. technology export rules continues to dog transatlantic cooperation efforts.

Ever since switching jurisdiction for compliance with International Traffic in Arms Regulations (ITAR) from the Commerce to the State Dept., Washington has promised to break the resulting logjam that requires foreign companies marketing or using products based on U.S. technologies to wait for months for requisite export licenses.

Although U.S. government and industry leaders insist that measures introduced by the State Dept. to expedite licenses have improved the situation, many foreign industry and government officials, even those from allies like Canada and Britain, disagree. British government minister for defense procurement, Lord Bach, recently complained about the slow progress, describing many of the U.S.-imposed constraints on Anglo-American defense-industrial relations as "absurd" (AW&ST May 12, p. 28).

London has long been pressing the U.S. for an ITAR waiver, with the U.K.-U.S. Declaration of Principles, signed as far back as 2000, meant to set this in motion.

John Howe, vice chairman of Thales U.K., said, "It seems to me in the ITAR waiver what is actually being asked for is something quite modest, it is a waiver of ITAR regulations in relation to unclassified information, so it ought not to raise any heroic problems of security classification or national security at all." BAE chairman, Sir Richard Evans, recently told the British Parliament's Defense Committee that the waiver issue was being broached at the highest level.

The ITAR problem is particularly acute in the space industry, where satellite operators and insurers, faced with an epidemic of serial failures, are demanding increasing access to manufacturer technical data to help underwriters better evaluate insured risks (AW&ST May 20, 2002, p. 47). Failure to meet these demands could accelerate the flight of capital from the space insurance sector and make it impossible to raise sufficient coverage to meet future growth, insurers told a gathering of industry representatives organized last month by Pagnanelli Risk Solutions.

According to Pierre-Eric Lys, space risk underwriter at insurance firm AGF, one out of four geostationary-Earth-orbit spacecraft launched since 1998 faces power-generation problems. New claims for past serial failures have pushed damages for 2001 alone past the $2-billion mark, and some losses have yet to be calculated. Launcher failures have added to industry woes.

Insurers have raised rates to compensate, but they remain well below the 18% historical level. Lys indicated that the ratio of cumulative earnings-to-capacity, a benchmark of industry profitability, have plummeted from a peak of 2.3 in 1997 to 1.4 in 2000 and -0.2 in March of this year.

The result has been a shrinkage of the space insurance base as underwriters reallocate capital to other lines of business. A number of underwriters have left the industry altogether--including one of the biggest, Rome-based Generali--and available capacity has shrunk to 700 million euros ($815.5 million). Actual working capacity is barely half that, Lys said.

"The ITAR situation varies somewhat depending on the U.S. contractor involved--better at Lockheed Martin, worse at Boeing--but on balance the situation is getting worse," said Telesat Canada CEO Larry Boisvert. An Alcatel Space official asserted that obtaining basic approval still takes 23 months, and each information exchange after that requires additional time-consuming reviews. Added an executive from Swedish Space Corp.: "Getting clearance for even the simplest technical information to underwriters can take 2-4 months."

Alenia Spazio Vice Chairman Giuseppe Viriglio said that in order to fix the problem, the U.S. may have to agree to a radical course change, probably by taking commercial components off the arms control list altogether, as some U.S. officials have suggested.

Telesat Canada ensured that its new Anik F1R satellite, being built by Astrium, will not be dependent on fickle U.S. export rules.

Satellite users said a failure to deal with the ITAR problem could result in fewer purchases of U.S. hardware. A case in point: when Telesat ordered its most recent satellite, Anik F1R, in February, it went to Astrium--the first time it had ever bought outside the U.S.--and ensured that the new spacecraft would not be dependent on U.S. components. "Without access to information, it will be hard to buy U.S.," Boisvert said. The same approach was echoed by AsiaSat CEO Peter Jackson: "We won't buy a satellite if we don't understand the full history and heritage [of the technology on it], and it's doubtful we'll have access to [this] if it's U.S.-built."