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Independent Task Force on America's Space Leadership: Statement on Export Controls for Satellites



Introduction
The continued exploration, development and use of space are critical to our nation's future. America's investment in space has not only helped save lives and enhance our well-being here on earth, but has also strengthened America's leadership in the global economy. According to the latest figures, over 115,000 Americans work in the satellite industry alone, up some 23% between 1997 and 1998. During the same period, the U.S. satellite industry generated $31 billion in revenues. Even as the US trade deficit hits record levels, the US still maintains a positive trade balance in export of satellite technology.

But America's leadership in space is now in jeopardy. While the Task Force agrees that national security must remain of the highest priority, the group finds that the reasonable need for government review of satellite export licensing applications has yielded a lengthy export process that puts America at a competitive disadvantage to other space-exporting nations. Delays due to staff and funding shortages at key government agencies will result in an increased lag time for US satellite companies to respond to business opportunities. In addition, routine satellite exports to friendly countries -- including several of our closest allies -- will be delayed unless the U.S. government takes action to improve and streamline the licensing system. Losing our lead in space would be difficult to overcome -- in real and symbolic terms.

The following statement of the Independent Task Force on America's Space Leadership petitions our elected and appointed officials, industry, and the general public to commit to space exploration and development as a national priority. We declare that in order to realize continued economic prosperity and leadership, we as a nation must give our highest commitment to these priorities:
- Encourage policies that secure American jobs in the space-driven economy of the new Millennium.
- Promote America's global leadership and competitive advantage in the development of commercial space products and services.
- Fund space defense systems that allow our armed forces the greatest advantage in guarding national security and defending America.
- Encourage policies that drive private investment in space products and services.

Background
Pursuant to the 1998 National Defense Authorization Act (NDAA), jurisdiction for export licensing of all commercial satellites, components and technical data was transferred from the Department of Commerce to the Department of State on March 15, 1999.

The State Department's Office of Defense Trade Controls (ODTC) regulates exports under the Arms Export Control Act. The net results of the switch from Commerce to State and the impact of new controls under the NDAA, were four fold:
1) many activities not requiring an export license under Commerce jurisdiction now require a license, technical assistance agreement (TAA) and monitoring under State licensing (e.g., marketing activities and standard information on satellite tracking, telemetry and control);
2) export license and TAA processing times do not have deadlines --creating problems in the commercial marketplace where companies must deliver products or face financial penalties;
3) additional export licenses and TAAs are required for the same activities (e.g., Commerce permitted more exports under license exceptions) and;
4) additional export licenses, TAAs and monitoring are now required even for satellites and components sold to or launched by NATO and major Non-NATO allies.

ODTC processes 45,000 licenses annually with only a handful of licensing officers. The satellite industry estimates that it will apply for an additional 2,500 to 3,000 new licenses from State this year.

Last year, at the same time that jurisdiction for satellites was moved to State, the Appropriations Committee instructed State to spend an additional $2 million on ODTC to handle this new workload (ODTC budget in FY 98 was $5.9 million). State has since reprogrammed most of the $2 million in additional funding for ODTC in FY99.

The net result of new controls, the transition to State, and the lack of staff have created a real backlog of license applications for commercial satellites and technical information. While delays for arms exports are common and may not pose a competitive disadvantage, delays for commercial manufacturers and operators mean financial penalties, lost contracts, and ultimately, a declining share of the global satellite market.

Due to the transition to State, many on-going activities such as discussions with customer operations service centers, foreign parts procurements and insurance briefings now require export licenses. After experiencing delays, many of these pending licenses are becoming emergencies, further tasking ODTC.

Much has changed since 1990, when all commercial satellites were last regulated by the State Department:

1) Requests for proposals (RFPs) from international customers used to be a lengthy process, giving U.S. satellite manufacturers many months to respond. Today, 30 to 60 day response periods are common, making it impossible to respond in the detail requested because of licensing cycle times at State.
2) The global satellite industry has tripled in size since 1992. The industry averaged a dozen commercial geo-stationary satellite launches per year in 1992 but is expected to conduct over 36 commercial launches to both geo-stationary and low earth orbit in 1999. Increasingly, these launches are for foreign satellite operators and international consortiums.
3) U.S. satellite manufacturers and operators are becoming increasingly global in their business operations due largely to lower regulatory barriers and strategic partnerships.
4) Another change from 1992 is the declining cycle time it takes to manufacture a satellite. In the early 90s it took 2-3 years. Now, satellite manufacturing time is down to 1 year to 18 months and U.S. companies are aiming for less for standard models. Cycle time is a major competitive advantage over the Europeans -- Alcatel, Aerospatiale Matra, and DASA. If the license processing time exceeds our manufacturing time, U.S. industry will lose this critical advantage.

For all satellite exports valued at $50 million and above, Congressional notification is now required prior to State issuing a license. This process, with its informal and formal timelines, can add two to six months to the time required to obtain a license. ODTC has set 90 working days as a goal -- not a deadline -- for processing export licenses and TAAs. This 4 1/2 months (added to the notification time) increases the total time required to process licenses for satellite exports from 7 months -- 11 months.

Recommendations
The Task Force on America's Space Leadership urges Congress and the Administration to take the following steps in order to maintain America's pre- eminence in space as well as to protect vital US economic and security interests:
* Provide additional funding for ODTC in FY00. The money is needed to recruit, train and retain qualified licensing officers and to upgrade aging computer systems that will reduce the unwieldy amount of paper associated with processing license applications.
* Licenses need to be expedited for NATO allies, major Non-NATO allies, and other friendly countries. An amendment to that effect was passed in July by the House as part of the State Department Authorization bill. The Senate should also agree to this, and the President should support it.
* The Congress and State Department officials should improve the notification process for commercial satellite exports -- maintaining Congressional review while speeding delivery of pending licenses to the appropriate committees.

The Space Awareness Alliance was launched in April 1996 to make space endeavors a national priority and to build broad-based, enduring public support for space exploration, research and commercialization. The Task Force on America's Space Leadership is an ad hoc, bipartisan project that seeks to educate and build consensus among the public on key public policy issues relating to space.


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Independent Task Force on America's Space Leadership: Statement on Export Controls for Satellites