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Congress may be the biggest obstacle to any significant export control reform in the foreseeable future, some advocates of reform in the space industry fear. (credit: J. Foust)

A fading opportunity for export control reform?

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The export control regime in the US has been the bane of the space industry now for a decade, ever since Congress moved satellites and related components to the US Munitions List (USML) in the late 1990s, where their export is governed by the more restrictive International Traffic in Arms Regulations (ITAR). This year, though, there have been signs of significant reform that could make it easier for US companies to sell space products and services overseas. Legislation working its way through Congress included provisions such as a rolling review of the contents of the USML, while the Obama Administration unveiled plans for a broad overhaul of the export control system (see “Prospects and concerns for export control reform”, The Space Review, March 29, 2010).

An administration review found that 74 percent of the 12,000 Category VII items licensed last year should be taken off the Munitions List.

“We’ve seen more action in the last six months than in the last ten years,” Mike Gold, director of Washington DC operations for Bigelow Aerospace, declared at a meeting last Wednesday in Washington of the export control working group of the Commercial Space Transportation Advisory Committee (COMSTAC), an industry group that supports the FAA’s Office of Commercial Space Transportation. Yet despite that action, some people, including Gold, who chairs COMSTAC’s export control working group, are increasingly skeptical that it will result in the concrete reform that the industry has long sought.

Do four singles equal a home run?

The latest initiative for export control reform came in April, when the administration announced plans for a comprehensive overhaul of the export control system. At the core of the proposal was a concept known as the “four singles”: a single (but tiered) export control list, a single licensing agency, a single enforcement agency, and a single IT system. The administration said it would implement the plan in three phases, starting with relatively simple items that the administration could do on its own, deferring to the later phases changes that require either congressional notification or legislation.

The impetus for this reform came from Secretary of Defense Robert Gates. “He got the president energized on the issue” after the two discussed export control reform at a dinner last year, said Maureen Tucker, senior advisor to the Undersecretary of State for Arms Control and International Security, during a panel discussion about the topic at the COMSTAC export control working group meeting. This led to a White House task force last November on export control reform that provided recommendations at the end of January that became the reform initiative announced in April.

Since the release of the reform plan, the administration has been drafting proposed legislation not yet ready to submit to Congress, she said. Other efforts include plans to create, by executive order, an enforcement coordination center to “deconflict” investigations into any export control violations, as well as developing the requirements for a single IT system.

One other key step is the beginning of a review of the items on the USML. “What we’re trying to do with the Munitions List is to make it a ‘positive’ list, much in the style of the Commerce list,” Tucker said, meaning that it would be very specific about what it includes, rather than being broad and vague, as it is now. “We’re trying to do that so we can draw a much brighter line between what is a USML item and what is a Commerce Control List item.”

The administration has started this with Category VII, or military vehicles such as tanks, creating technical specifications to make it clear what items should remain on the USML and which should be moved to the less restrictive CCL. The result of that review, announced at the end of August, found that 74 percent of the 12,000 Category VII items licensed last year should, in fact, be moved either to the CCL or “decontrolled”—taken off any export control list—altogether. Eight percent of the items would go onto the lowest of three tiers under the proposed plan, covering items “hat provide a significant military or intelligence advantage” but are broadly available, while 18 percent would go into a middle tier of items only available from allied countries. None of the items on the list would go into the highest tier, covering items available only from the US.

“In my experience, there is no Republican or Democratic position,” Moore said of export control reform. “More often, it’s more of an executive-legislative issue.”

With the completion of the Category VII review, Tucker said the next step the administration plans to take is conduct a similar review of items on Category XV, which covers satellites and related components. Because there’s already been close scrutiny of these items, “I think the work will go more quickly,” she said. However, a review doesn’t necessary mean any reclassification of items on the list is imminent, in part because the administration wants to review other categories of the USML first, but also because of the unique way in which the items were placed in the USML in the first place, by an act of Congress.

“Category XV is the unique beast in all the categories of the review process,” said Anthony Dearth, chief of the Space and Technology Division of the Office of Defense Trade Controls within the State Department. “Unless we get any legislative relief, then all it is is a proposal.”

Another potential area of reform is in the use of Technical Assistance Agreements (TAAs), which allow US companies to exchange technical data with foreign organizations. “We couldn’t find a real good reason in all the historical documentation about why there’s even such a thing as a Technical Assistance Agreement in the first place,” Dearth said. “We’re looking to possibly get rid of Technical Assistance Agreements” and replace them with defense service licenses, which wouldn’t require the signature of the foreign parties, he said. A notice about that proposed change, he said, could appear in the Federal Register within the next 45–60 days for public comment.

Reality check for reform

The biggest obstacle to any major reform is Congress, which would have to approve major elements of the administration’s proposed changes. “I imagine that there’s going to be some interesting discourse between the relevant committees” on this, said Thomas Moore, senior professional staff member on the Senate Committee on Foreign Relations.

However, he and others said they didn’t see export control as a particularly partisan issue. “It’s not something that neatly falls along party lines,” Moore, a Republican, said, citing bigger factors such as what industries are in a member’s district and each member’s personal views and experiences about countries. “In my experience, there is no Republican or Democratic position,” he said. “More often, it’s more of an executive-legislative issue,” with a debate between the White House and Congress, regardless of the parties in power.

One key issue upon which may hinge the fate of export control reform is China. “Politically, what’s hiding in the background is China,” Moore said, citing continued Chinese interest in US space technology currently protected under ITAR. That system, he noted, has helped limit the flow of sensitive technologies to China.

“Everything falls apart when you get to Congress,” Gold said. “What the administration wants, and what the bureaucracy wants, and, frankly, what’s the right decision for the nation, falls apart on political issues.”

Gold, in his summary of the working group meeting to the full COMSTAC the next day, concurred. “If something were done, I think you have to completely take China off the table,” he said. Doing so, he believes, would get people like Rep. Dana Rohrabacher (R-CA), an advocate of export control reform but also a “China hawk”, as Gold described him, to support a change in export policy.

However, Gold was quite pessimistic about the prospects of reform in his comments at the COMSTAC meeting. After outlining the administration’s reform plans, he concluded, “In my opinion, none of it will happen.” Congress, he believes, thinks that the current system does “a very good job at nonproliferation and keeping technology from China,” which would outweigh any benefits to US industry from export control reform.

“Everything falls apart when you get to Congress,” he continued. “What the administration wants, and what the bureaucracy wants, and, frankly, what’s the right decision for the nation, falls apart on political issues.” Members of Congress who support export control run the risk, he said, of appearing weak on national security. That’s continued, he said, even after the Defense Department raised concerns about the adverse effects of export control on the defense industrial base in the US.

“There is no real lobby or parochial constituency for export control reform,” Gold said, despite some lobbying efforts by companies and industry organizations in recent years. “This is why we haven’t seen change, and I fear why we will not see change in the future.”