Revisions to Satellite Export Regulations Released

The State Department and Commerce Department issued interim final rules revising satellite export controls yesterday (May 13, 2014).   The long-awaited revisions to the International Traffic in Arms Regulations (ITAR) will allow easier export of commercial satellites to most countries.

The reforms are part of a broader Obama Administration-led Export Control Reform Initiative intended to make American companies more competitive in international markets.

Draft rules were released last year, allowing interested parties to comment on the planned changes.  The rules released yesterday reflect the input that was received and will remain “interim final rules” for the next six months to allow additional comments.  The State Department’s interim final rule and the Commerce Department’s companion revisions are published in the May 13, 2014 Federal Register.   The two departments share responsibility for export controls. The State Department oversees exports of ITAR-controlled items on the U.S. Munitions List (USML).  The Commerce Department regulates “dual-use” items under the Export Administration Regulations (EAR).   Items on the USML are much more closely guarded than those on the EAR because of their greater potential military applications.

The Commercial Spaceflight Federation (CSF) praised the export control reforms, but expressed concern that “almost all commercial human spacecraft” remain on the USML.  CSF President Michael Lopez-Alegria said that while yesterday’s actions should be applauded, “there is still much progress to be made on commercial spacecraft. … We thank the Administration for their work on this critical issue and look forward to continued revisions to ensure the U.S. remains a leader in spaceflight.”  CSF advocates for commercial human spaceflight.

The Satellite Industry Association (SIA), a trade association of commercial satellite operators, service providers, manufacturers, launch service providers, and ground equipment suppliers, hailed the reforms.  SIA President Patricia Cooper said that “With a more modern regulatory environment for exports in place, we look forward to unleashing the full force of American ingenuity and innovation at work in the international market.”

Similarly, the Aerospace Industries Association (AIA) congratulated the government for the reforms.  AIA, which represents the U.S. aerospace industry, estimated in 2012 that U.S. manufacturers lost $21 billion in revenue between 1999 and 2009 because of the strict limits placed on exports of commercial satellites in 1999.

Congress imposed the limits in 1999 after a congressional investigation (the Cox Committee) determined that China had gained militarily-important information by launching U.S.-manufactured commercial communications satellites.  Such satellites had been moved from State Department to Commerce Department control under the George H.W. Bush and Clinton Administrations.  In 1999, Congress moved them back to the State Department’s Munitions List and removed the presidential authority to determine which department had control over them — only Congress could make that determination.   The satellite industry immediately began its attempts to return the satellites to Commerce Department control, which now have finally reached fruition after Congress changed the law in 2012.  Exports to China, however, remain prohibited.