Obama Orders Review of Export Controls

President Obama has ordered a review of U.S. export control policy. In a press statement on Thursday, August 13, the White House announced that the President has directed that the National Economic Council (NEC) and National Security Council (NSC) “launch a broad-based interagency process for reviewing the overall U.S. export control system, including both the dual-use and defense trade processes.”

Export of U.S. technologies is controlled by either the State Department or the Commerce Department depending on the nature of the technology involved. The State Department implements the International Traffic in Arms Regulations (ITAR) that control export of items on the so-called “Munitions List” while the Commerce Department regulates exports of “dual-use” items that may have both commercial and military applications. The State Department controls are stricter than those of the Commerce Department.

The negative impact of the current implementation of ITAR on U.S. space activities has been widely studied and criticized for the past 10 years. The National Research Council released two studies, one in 2008 on the impact on space science cooperation and the other in 2009 on broader impacts. The latter study, co-chaired by former national security adviser Brent Scowcroft and Stanford University President John Hennessy, was the subject of a hearing by the House Science and Technology Committee in February. Former Lockheed Martin executive Tom Young and former Aerospace Corporation President Bill Ballhaus also co-chaired a recent study under the auspices of the Center for Strategic and International Studies. All called for ITAR reform.

The recommendations of those and other studies may finally bear fruit. Both the White House and Congress are now apparently willing to reconsider changes made by Congress in the late 1990s in the wake of the “Loral-Hughes” controversy.

In 1997, allegations were made that satellite manufacturers Space Systems/Loral and Hughes Electronics (now part of Boeing) violated export control laws and provided technical information to China that aided the Chinese military. The companies were helping China diagnose the reasons for a failed Chinese launch of a Loral-built commercial communications satellite. The allegations were investigated by the Justice Department and a special congressional committee chaired by then-Congressman Christopher Cox. The Cox committee’s report concluded that the companies deliberately transferred technical information and know-how to the Chinese. Congress subsequently passed legislation that moved export of commercial communications satellites back under State Department control effective March 1999. They had been under State Department control until the early 1990s when they were transferred to the Commerce Department’s dual-use list. By moving them back under ITAR, critics have argued that the U.S. commercial communications satellite industry has been deeply harmed, with European competitors offering “ITAR-free” satellites to prospective customers.

The Aerospace Industries Association (AIA) was one of several organizations releasing statements praising the Obama announcement.