Fix ITAR to Protect our National and Economic Security

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Written by ASA Administrator on November 26, 2007 – 12:00 pm

November 26, 2007

Fix ITAR to Protect our National and Economic Security
Ronald Reagan said i t many times: “Trust but verify.” When Americans buy pet food for their dogs, tooth paste or toys for their kids, they trust that those products will be safe.We assume our federal government is verifying that the products moving into our country from abroad and onto our store shelves are safe. But Americans have learned recently that while we have trusted, our government has not always verified.

More than ever, our federal government must insure that imported goods meet the same safety standards that U.S.-made goods do. American producers and American workers cannot compete against Chinese manufacturers who use hazardous materials. Moreover, our government should verify that foreign competitors operate by the same fair trade standards.

Pet food, tooth paste and children’s toys are three reasons why the United States ran a $230 billion trade deficit with China last year. Besides failing to verify that overseas products are safe, our federal government has failed to verify that the playing field is level for American producers and American workers.

China is not only interested in selling us low-tech products. Today they — and the rest of the world—are challenging our leadership in the quintessential American enterprise: aerospace. Specifically, China wants to be a global leader in rocketry and spacecraft. Today they buy their commercial communications satellites on the world market, but also give preference to satellite manufacturers willing to give preference to their rockets — somethingU.S. government policy makes difficult, if not all but impossible because of national security concerns.

Today, commercial space applications are growing worldwide. Satellites have become essential for distance learning, telemedicine, television and radio broadcasting, forecasting weather and monitoring climate, executing search and rescue, navigation, communications, transportation, agriculture — in short, in virtually every realm of life. But satellites can’t get intoorbitwithout rockets and a launch.

To advance their own national interests, the Chinese are giving preference to manufacturers willing to use their commercial rocket, which is cheaper because of their low wage rates and willingness to offer predatory pricing compared to the prices of the rockets sold by other countries. Their rockets originally were developed by the Chinese government for military purposes. Now, they are being used for commercial space applications at a time when commercial space is booming.

A U.S. pet food producer cannot compete against a Chinese producer who uses substandard ingredients. Nor can a U.S. commercial space company compete when the Chinese government prices its Long March rockets at half the price available from other launch providers.

This situation was recently compounded when French aerospace company Thales, whichsells commercial satellites built by the French-Italian satellite-maker Thales Alenia Space, teamed with the Chinese government. Together they are determined to dominate the commercial space industry by offering the combination of a below-market Chinese Long March rocket and a satellite that contains no U.S. parts so that they canavoid applying forU.S. export licenses—something just about every other satellitemanufacturer in the world must do.

So, why don’t U.S. space companies team with Chinese launch providers? The answer is simple: It runs counter to current U.S. policy. In 1999, Congress rewrote the U.S. export regulations, known as International Traffic in Arms Regulations (ITAR), transferring the authority for regulating satellite export licenses from the U.S. Department of Commerce to the U.S. State Department, which has been much tougher than Commerce was on satellite exports to China. In fact, since the shift, very few satellite exports to China have been approved, especially satellites to be launched aboard Long March rockets. The impact of this law has fallen hardest on U.S. satellite manufacturers and their U.S.-based suppliers.

The consequence is that by denying U.S. satellite companies full access to Chinese customers that want launches aboard Chinese rockets, the United States government actually has encouraged collaboration among the builders of Chinese Long March rockets, Chinese-owned satellite service companies and Thales, whichbuilds commercial communication satellites through Thales- Alenia, its French-Italian satellite manufacturer.

This European-Asian marriage could result in even greater loss of market share for the U.S. space industry and American workers, particularly among satellite component makers — and not just in the market for Chinese customers. Compliance withITAR, while faster than it was five years ago, remains very time consuming. Even for commercial satellite buyers based in countries that are staunch U.S. allies, time is money and many would prefer to avoid time delays whenever possible, especially considering the uncertainty about how ITAR might be applied to a particular project.

It is ironic that at the sametime the U.S. Department of Defense (DoD) rewardsThales,aDoDsupplier, with new American contracts, Thales explicitly and publicly disregards U.S. policy on sharing satellite technology with China. Congressmust take action to certify that companies doing business with the DoD abide by U.S. defense and security policies. Our government should not contribute to the profits of foreign companies that exploit our own laws at the expense of the American worker.

One positive step would be for Congress to approve legislation that would prohibit the Defense Department fromgiving contracts to companies that use Chinese launch vehicles. However, ITAR is a problem even when Chinese rockets are not involved. The law actually has encouraged other countries to go into competition with U.S. satellite component makers by building factories to make satellite parts they once had to buy from U.S. companies. Instead of discouraging the spread of these technologies, ITAR is speeding it up. That hurts U.S. security and U.S. companies.

On a panel at the 58th International Astronautical Congress held this fall in Hyderabad, India, Ray Williamson, a research professor at George Washington University’s Space Policy Institute in Washington, stated, “In the long run ITAR is going to be destructive of U.S. industry.”

Congress must act to reform ITAR regulations to strengthen our commercial space industries. The current regulations allow export licenses tobe granted when a part is available commercially elsewhere in the world. In fact, the very existence of what Thales calls its “ITAR Free Satellite” suggests most satellite parts no longer belong on the list of prohibited exports. Are-evaluation of the ITARcontrolled technologies is critical to ensure U.S. competitiveness and jobs.

Congress would do well to heed the words of Ronald Regan: “Trust but verify.”

It takes more than trust to ensure that laws written to strengthen the United States are actually doing so. Congress needs to verify that U.S. laws are working as intended. Today ITAR is not working as intended and must be reformed in order to produce a stronger America.

Brian Dubie is Vermont’s lieutenant governor and chair of the Aerospace States Association (ASA), whose mission is to grow the U.S. aerospace sector and to promote the education of America’s next generation.


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