The ITAR Controversy

As reported in the Wall Street Journal and Aviation Week, among other major publications, China is importing “ITAR-free” satellites and other space technologies from a European company, thereby evading U.S. export controls that are intended to safeguard our national security. China is also developing its Long March 5 rocket that will be capable not only of delivering people to the moon, but also landing nuclear payloads anywhere in the United States.

That’s from a Senate Hearing (webcast) earlier this month. For those unfamiliar, ITAR (International Traffic in Arms Regulations) is a set of regulations that prohibit Americans or American companies from sharing or selling information or materials pertaining to defense and military related technologies. There is a balance to be found here: since lots of American technology is adapted from military technology, it can be difficult to sell non-militay products internationally (like satellite launch vehicles) and to collaborate with International partners on products that include proprietary military technology. Wikipedia does a nice job describing the controversy:

There is an open debate between the Department of State and the industries and academia regulated by ITAR concerning how harmful the regulatory restrictions are for U.S. businesses and higher education institutions. The Department of State insists that ITAR has limited effect and provides a security benefit to the nation that these sectors must bear. Every year the Department of State can cite multiple arrests of ITAR violators by U.S. Immigration and Customs Enforcement agents. However, many companies and institutions within the affected areas argue that ITAR is stifling U.S. trade and science. Companies argue that ITAR is a significant trade barrier that acts as a substantial negative subsidy, weakening U.S. industries’ ability to compete [4]. U.S. companies point to announcements in Europe by EADS and Alcatel promoting their “ITAR-free” satellites and defense items.[5] Higher education institutions argue that ITAR prevents the best international students from studying and contributing in the U.S. and prevents cooperation on international scientific projects.

Currently, officials at the Department of State dismiss the burden on industry and educational institutions as minor compared to the security provided by ITAR. They also view the announcements of “ITAR-free” items as anecdotal and not systemic.

Now that we’ve got the background, back to the Senate hearing: China is importing “ITAR-free” space technology from European countries. It’s a perfect example of the controversy: the U.S., worried about national security implications, limits technology sharing/selling to China. But, when Europe fills the gap, it just cuts at traditional U.S. superiority in the space/satellite technology market. Just this Tuesday, with the Berlin Air Show as the backdrop, OHB presented the European Space Agency with a plan (subscription-only) to develop ITAR-free spacecraft:

BERLIN — European governments have agreed that a new commercial telecommunications satellite design they are financing will permit customers to order a version without U.S.-built parts covered by the now-infamous U.S. technology export regime known as ITAR, government and industry officials said here May 27.

Officials said that while the first Small GEO platform, being tailored for Spanish satellite-fleet operator Hispasat, will feature U.S. parts, future versions that are not subject to ITAR, or U.S. International Traffic in Arms Regulations, will be available upon customer request. ITAR rules treat satellites and many of their components as weapons for export-control purposes and allow the U.S. State Department to veto those who can purchase the satellite, and where it can be launched from.

“Customers will be able to choose which version they want, although the ITAR-free version will be a little bit more expensive,” said Manfred Fuchs, founder and president of OHB System of Bremen, Germany, which is prime contractor for the Small GEO program.

Led by Germany and Spain, nine European Space Agency (ESA) governments — France notably is absent — are contributing 190 million euros ($299 million) to design the Small GEO and develop the first model. Hispasat is the first customer and has agreed to spend more than 50 million euros of its own to pay for the satellite’s launch and insurance. The first Small GEO model, called Hispasat AG1, will be fitted with a Ku- and Ka-band telecommunications payload and is scheduled for launch in 2012. OHB and Hispasat signed a preliminary contract for the satellite May 27 here at the Berlin air show, ILA 2008. A final construction contract is expected to follow in September.

Industry and government officials said OHB presented ESA with a list of components and technologies that would be needed for the Small GEO platform and asked which were available in Europe. All major subsystems will be built by European contractors. But several individual components will be purchased in the United States.

“It was more a matter of cost and time than anything else,” a European industry official involved in the selection said. “This is a new satellite design and we already have enough challenges without adding the complication of making it ITAR-free from the outset.”

European governments have agreed that a new commercial telecommunications satellite design they are financing will permit customers to order a version without U.S.-built parts covered by the now-infamous U.S. technology export regime known as ITAR, government and industry officials said here May 27.

Officials said that while the first Small GEO platform, being tailored for Spanish satellite-fleet operator Hispasat, will feature U.S. parts, future versions that are not subject to ITAR, or U.S. International Traffic in Arms Regulations, will be available upon customer request. ITAR rules treat satellites and many of their components as weapons for export-control purposes and allow the U.S. State Department to veto those who can purchase the satellite, and where it can be launched from.

“Customers will be able to choose which version they want, although the ITAR-free version will be a little bit more expensive,” said Manfred Fuchs, founder and president of OHB System of Bremen, Germany, which is prime contractor for the Small GEO program.

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