The Space Reviewin association with SpaceNews

satellite illustration
For over a decade now strict export controls have hurt the US space industry and its ability to sell satellites and other products overseas, doing perhaps more harm to national security in the long run than good. (credit: Lockheed Martin)

Space export control reform: the different schools of thought and a proposed way forward

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2010 is turning out to be a banner year for those interested in seeing reform to the International Traffic in Arms Regulations (ITAR). For the first time in over a decade, the space community, academia, and both the executive and legislative branches of the federal government are reviewing and considering what to do to improve our space export control system while maintaining a robust national security and civil space enterprise. When observing this debate and discussion, one should understand the differing views toward export controls and its effect on national security.

According to the 2010 QDR public report, the current export control system (and not just the part that applies to the space industry) is considered a “national security risk”.

There are three major views when it comes to export control reform. First, ITAR itself “poses a potential national security risk”, as noted in the latest Quadrennial Defense Review (QDR), due to its complexity, its protection of everything, and its hindrance to international cooperation and industrial competition. The second is a view held by many members of Congress and dates back to at least 1999, when the current space export control framework was devised and passed in the Strom Thurmond National Defense Authorization Act. That view is to protect everything space and missile related, regardless of its size, commonality, and availability in the global market. All of these parts and components should be controlled within the United States Munitions List (USML) as weapons and not as commodities on the Commerce Control List (CCL). He third is a thought process of many in aerospace and industrial advocacy groups, which promotes removing all commercial communications satellites and their widely available components off the USML and to the CCL to be sold openly, giving the US space industrial base the added boost it needs to compete in the global space market and reduce the attractiveness of the “ITAR free” movement in markets such as India, Europe, and China. If these three main viewpoints on ITAR were the only ones, which would be the best way forward?

Let’s begin with the first view. According to the 2010 QDR public report, the current export control system (and not just the part that applies to the space industry) is considered a “national security risk”. Previously the concern was not with ITAR itself, but that the application of ITAR, with its burdensome restrictions and protections, was causing national security risks because the US space industry was losing revenue and market share, and thus jeopardized its ability to also meet the needs of the Defense Department. Now, the view is that the real problem lies in the system itself, which relies on Cold War-era protection methods and assumes an economic environment based on that previous era.

Some argue that the emergence of the global economic system dominating relations among states and trade makes our current export control system obsolete and, therefore, an enabler for risk to not only our national security, but our economic security and prosperity as well. In addition, it views the risk to security based upon a perceived lack of real engagement in the global commons of space and the utilization of this commons for the benefit of all humanity. In other words, due to the increasing globalization of the space industry, the United States should maintain its “lead” rather than “preeminence” through increasingly participating in the global economy, rather than protecting its industrial base and ability to produce the space forces needed to stay one generation ahead of any adversary. In this view, American space power is not space power; it’s space as a foreign policy and strategy tool.

This view was recently stated by the President in the QDR as well as the previous administration’s National Defense Strategy of 2008, where the global commons idea is promoted as only way to have leadership in the 21st century. Also, this strategy’s goal is to further integrate the United States’ space industrial base into the global economy rather than engaging them with American space superiority as the goal. So, this view does have some support in current national strategy ranging across two administrations, both Republican and Democratic.

While companies complain that it hurt their business, research has shown that it is not so much the ITAR protections themselves that have hurt American space business but rather the process, procedures, and regulatory frameworks that cost companies money.

Finally, this view takes it to the next level and promotes a brand new system that is not based on Cold War theories of deterrence and superpower rivalries but instead on partnerships and alliances across the world. The President recently spoke about this view when speaking on his administration’s review of export controls at the annual conference of the Export-Import Bank and its connection with his National Export Initiative. He stated the changes he will be laying out soon are needed “for our strategic and high tech industries, which will strengthen our national security.”

By contrast, the second view seeks to protect everything and require a rigid licensing and monitoring framework to protect the release of anything space related to anyone desiring said technologies. This view came about after the Loral satellite incident involving China in the late 1990s. The Cox Commission and the Congress found errors and lapses in control of US technology transfers regarding missiles and, as a result, the Congress decided to roll everything over to the USML using very vague and broad language:

…all satellites and related items that are on the Commerce Control List of dual use items in the Export Administration Regulations… on the date of the enactment of this Act shall be transferred to the United States Munitions List and controlled under section 38 of the Arms Export Control Act. [Emphasis added]

As is clear from reading the legislative language (“satellite and related items”) it was very broad, encompassing sensitive space technology as well as those items like Kapton tape that is easily found on the global space market and used in non-military vehicles as well as military spacecraft. The problem with this view is that, while good intentioned, it created a new problem, the creation of new space markets around the world to compete with the United States. Whereas before the United States was the leader in the space market for manufacturing commercial spacecraft, now nations like India, China, and Europe were picking up on the new burdensome ITAR process and profiting from it. This led to a decrease in the reliance of other allied nations on US spacecraft, launch vehicles, and other components and further facilitated the shrinking of the US space industrial base as well as the lower tier supplier base.

While companies complain that it hurt their business, research has shown that it is not so much the ITAR protections themselves that have hurt American space business but rather the process, procedures, and regulatory frameworks that cost companies money. The money that could be better spent in research, development, and other technology-advancing endeavors is wasted by paying for lawyers and other experts to wade through the bureaucratic red tape to acquire the necessary licenses. That’s money that could otherwise be invested in marketing their products worldwide. The ITAR-free arena doesn’t have all of those increased costs involving protection and mission assurance that American products have. As a result, their prices are lower than American competitors (some so low that American companies don’t have a chance of really being competitive globally), thereby attracting customers that once only flocked to the US space industry but now go to Europe to build their satellites and China to launch them.

The more we understand the true national security risks of the situation before we make any legislative changes, the more secure and true our national strategy and course in space security will be.

The third idea lies at the halfway point, if you will, between the first two. This allows for some of the items to be moved from the USML to the CCL, which controlled by the Commerce Department instead of the State Department. Many view one main area, commercial communications satellites, to be “safe” to transfer to the CCL, allowing for common components across the space community to be sold around the world. This would allow some critical technologies to still be protected under the USML while more common components to fall under a more permissive system. The goal of this approach is to regain lost ground in the space marketplace. This sounds like a logical plan, and is currently being explored by a group tasked by Congress last year in the 2010 National Defense Authorization Act in Section 1248. This congressionally-directed action tasked the State Department (who controls the USML) and the Department of Defense to evaluate the national security risks of removing all space components from the USML.

So what is the best approach for the United States to fix the ITAR issue? In this author’s opinion, each idea has parts that make sense. Obviously, relationships with our allies are very important and should be nurtured. However, the concept of protecting our advantages in space technology should be accomplished in the most efficient and responsible way possible to ensure we, as a spacefaring nation, can maintain leadership. Finally, it also makes sense to protect only those items that need to be protected and let the industry become competitive in the global space market.

The United States must remember that, despite a push for globalization and the trend of national strategy to embrace globalization and the global economic system in trade, its primary responsibility is to protect the sovereignty of the country and provide for the common defense as stated in the Constitution. In order to do this, America must maintain not just an edge over our peer and near-peer competitors on the world stage but also preeminence and preferably clear leadership in the areas of space. As one historian noted, John F. Kennedy understood that in order to maintain the top leadership position on Earth, a nation must maintain its leadership in space. This “High Ground” must be led by the United States and, with its cooperation and partnership of its allies, allow for freedom of access in space and to space capabilities.

The United States must protect what it needs to and allow the industry to become the leading power economically with regards to space. Without a strong industrial base that is fully integrated into the planning and strategy-crafting processes of the national security space enterprise, our industry will eventually cease having the ability to effectively develop high-quality spacecraft and launch vehicles needed to maintain space leadership, much less that of a superpower. While in this author’s opinion the third option is the best overall, the government should undertake a thorough, robust national security risk assessment to ensure its effects on our economic leverage and influence. Ideally, this national security risk assessment should be done at the National Security Council and National Economic Council levels and then assess any questions or issues those national security risk assessments reveal to Congress and the White House.

Do we need a brand new export control system? No. Does it need reform and streamlining? Yes. ITAR in and of itself is not bad, but the processes need to be reformed to allow US companies, both large and small, to be competitive on the global market without draining their resources in bureaucratic messes.

This author eagerly awaits the results of both the President’s study (which according to news reports will be released to the public in April when Secretary of Defense Gates unveils the President’s way forward) as well as the Congressional one (also slated for release in April) to see what occurs on this very important front. The more we understand the true national security risks of the situation before we make any legislative changes, the more secure and true our national strategy and course in space security will be.