Senate Unlikely to Take Up ITAR Overhaul This Year
The Senate Committee on Foreign Relations is expected to cut provisions for an ITAR revamp from a foreign relations bill that passed the House this year, industry executives said. The language on International Traffic in Arms Regulations could be reattached in reconciling the bill with the House version or taken up as a separate bill, said a lobbyist working on the issue. Many in the space industry say ITAR, which restricts the movements and sales of satellites, has caused a decrease in market-share for U.S. satellite and component makers.
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The Senate probably won’t have time to vote on the matter this session because issues such as health-care overhaul and carbon cap-and-trade are monopolizing its time, executives said. But they do expect a vote this Congress. The Senate committee probably will strip the ITAR language to produce a “clean version” of the bill, which reauthorizes the State Department and the Peace Corps for fiscal 2010 and 2011, the lobbyist said. Congress hasn’t passed a straight State Department reauthorization since 2002.
The House bill (HR-2410) passed in June and gives the Executive Office of the President back the authority to remove commercial satellites and components from a munitions list closely regulated by the State Department. Sales of items on the list require licenses that can take several months to obtain. The president could keep some sensitive satellite components on the munitions list.
Commercial satellites and, in effect, their components have been on the munitions list since 1998, when they were removed from Commerce Department control under the Strom Thurmond National Defense Authorization Act. If the president returned satellite control to Commerce, exports would continue to be monitored but with fewer licensing requirements, executives said.
Supporters of revamping ITAR said the rules have crippled the satellite component industry. Domestic component makers target customers beyond U.S. satellite makers, said Remy Nathan, assistant vice president of foreign affairs at the Aerospace Industry Association. “Those makers can’t generate enough business purely on low volume, high sensitivity products to sustain themselves.” Eventually the government will need to begin stockpiling or relax export controls to keep the component makers in business, he said.
Top-tier satellite makers can work around the regulations, but smaller companies can’t, experts said. “The ITAR does not affect foreign sales by the large U.S. prime satellite manufacturers, each of which have large staffs of export compliance personnel, to the same extent as foreign sales by small or even medium-sized U.S. component manufacturers,” said John Ordway, a partner at Berliner, Corcoran who specializes in the regulations. Many small and mid-sized firms “do not have the resources necessary to work with the ITAR,” he said.
Opposition to an ITAR overhaul is fanned by national- security qualms. The main worry is that China will improve its launch capabilities and other technologies by reverse- engineering American technologies. As a result, the House legislation features what’s called the China carve-out: The president may not take off the munitions list any “satellite or related component that may, directly or indirectly, be transferred to, or launched into outer space” by China.
Another concern is that the Commerce Department doesn’t have the expertise or employees to monitor the movement of satellites and their parts, a lobbyist said. A National Security Council review of export controls has added momentum to overhaul efforts. The review, announced in August (CD Aug 17 p7), is just starting, industry executives said.
Supporters of a revamp call the legislation and executive office review significant steps to keep the U.S. space industry healthy. “We are starting to see a recognition through all of Congress that the status quo of export control could be handled better,” said Nathan.