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Sherman’s march towards ITAR reform

April 1, 2009 at 9:08 am · Filed under Congress

Thursday afternoon the Subcommittee on Terrorism, Nonproliferation and Trade of the House Foreign Affairs Committee is holding a hearing on “Export Controls on Satellite Technology”, discussing the impact ITAR has had on the US space industry over the last decade. It marks the beginning of the latest effort to try and reform the export control regime for satellites and related technologies.

The chairman of the subcommittee, Congressman Brad Sherman (D-CA), discussed his plans during a special appearance during a panel on ITAR at the Satellite 2009 conference in Washington last week. He said Thursday’s hearing was the first in a series of hearings on “substantive” export control issues, with a focus “first and foremost” on satellites. “Recently the space industry has made credible arguments that ITAR controls have hurt their business and have hurt our space industrial base significantly,” he said. “That claim is echoed—at least in private—by some in the intelligence community, who claim they find it more and more difficult to source satellite-related components domestically.”

So what kind of reform does Rep. Sherman have in mind? In the near term, it appears he is looking for relatively modest changes. “A lot will depend on the hearings and what solutions come up,” he said. “Solutions that have big problems will move more slowly than solutions that are no-brainers.” An example of a “no-brainer”, he said is getting the Directorate of Defense Trade Controls (DDTC) within the State Department to more rapidly process export license applications, something he said DDTC has already started to do after prodding by himself and others in Congress.

Sherman said that the incidents in the 1990s that triggered the inclusion of satellite technology on the US Munitions List—the transfer of US satellite technology to China after failures of Chinese rockets carrying those satellites—created “an anger [that] was mal-channeled” into the current state of affairs. “I won’t say it’s been ineffective, but it certainly was a crude response.”

His comments, though, indicate a fixation on China, and the availability of low-cost Chinese launches, as a driving interest in ITAR reform that may be misplaced. For example, one solution he suggested for the current ITAR situation was not to necessarily remove satellite technologies from the Munitions List or otherwise reform how their exports are regulated, but to instead subsidize the US launch industry so that they could be cost-competitive with the Chinese. The low cost of Chinese launches “begs the question of how much does China subsidize its rocket program and why aren’t we subsidizing ours to the same level,” he said. “We should be focused on keeping the rocket jobs, the rocket technology, plus the satellite jobs and the satellite technology, here in the United States.”

Of course, such an approach might cost the US billions of dollars a year (on top of what the Defense Department is paying to United Launch Alliance for the EELV) and is no guarantee that it would attract additional commercial customers or simply encourage other countries to further subsidize their own vehicles to compete. (And, ironically, a cheaper alternative is just down the 405 freeway from Sherman’s home district: SpaceX is promising commercial Falcon 9 launches that would certainly be competitive with, or even cheaper than, Chinese vehicles, without massive federal subsidies.)

Other panelists in the session, speaking after Rep. Sherman departed, were skeptical that desire for access to Chinese launches was driving calls for ITAR reform. Pierre Chao, a senior associate at CSIS who led a study of export control issues, said the interest in so-called “ITAR-free” satellites being developed by Thales Alenia Space in particular was not primarily motivated by access to Chinese launches, even though such spacecraft are being launched by the Chinese. “The evidence says it’s been prompted more by the uncertainty embodied with the US ITAR system,” he said, referring to delays in getting approvals for export licenses and related agreements.

Any bid to reform ITAR, though, will have to take into account economic arguments, Sherman warned, saying that Congress is almost totally preoccupied with the economy. “No matter what your proposal is—if you have a ‘Puppy Protection Act’—you have no chance of passing it unless you can prove that it can somehow help the economy,” he said. ITAR reform proposals that can demonstrate that, he said, “may allow us to overcome our previous obsession” with technology transfer to China.

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4 Comments »

John Malkin wrote @ April 2nd, 2009 at 10:04 am

So has SpaceX or any of the Commercial alternatives talked to Congressman Sherman? Maybe one of his aids reads this and they will mention it to him. Wouldn’t it be them that would inform him about current alternatives? It sounds like a good time to push an expanded COTS. Can anyone whisper in his ear?

nobody wrote @ April 3rd, 2009 at 6:33 pm

How typical. Government creates a problem through stupid legislation, then want to spend a few billion to partially offset some of the most visible negative consequences.

All of the debate in the story truly misses the point. The real problem with ITAR is not “getting the Directorate of Defense Trade Controls (DDTC) within the State Department to more rapidly process export license applications …”. DDTC can hire 100 million clerks and guarantee same day disposition of all requests and it’s still death for the industry.

ITAR stifles communication with ALL customers foreign and domestic. A potential customer can ask how the system works, what metal a particular part is made of, or what it looks like. Bzzt! Can’t tell you, that’s ITAR restricted. Can you email me a drawing? No, ITAR restricted. What about its structural modes? Nope, ITAR. It’s impossible for a potential customer to find out what products are available because of ITAR. A foreign customer, who has already bought the damn thing, can’t find out anything about it because of ITAR. It’s a bleeping connector backshell! Doesn’t matter, it’s ITAR restricted.

Commercial domestic companies (at least the smart ones) refuse all business with space companies, lest they get stuck in some ITAR tarball. Commercial domestic companies who produce ordinary commercial parts and would like to sell to the space industry but but don’t kowtow to the right people get put on the blacklist and shut out.

ITAR has already served as the motivation for creation of European companies that make things that the US used to have a effective monopoly. The American stuff was so good that nobody bothered competing. When the American stuff became unavailable, except with intolerable strings attached, others had no choice but to start making it themselves. That business might well be gone for good. If you’re in Europe, who would you rather buy from, a fellow ESA member or someone across the Atlantic? That’s an easy decision. If you’re in Japan, would you rather buy from a new business that treats you like a customer, or your previous supplier, who treated you like a criminal? Would you rather buy it from someone who answers your questions over the phone, or the one who will think about it, after it’s been vetted by four layers of export control lawyers?

ITAR even makes it impossible for US companies to buy unique capabilities from our neighbors. That’s right, they have the know how and we don’t, but we treat them like thieves when they ask for a bolt torque.

Nibbling at the edges of ITAR is not going to fix anything. It needs to be blown completely out of the water with an admission that it was all a terrible mistake that we’ll never do again. Maybe there’s still enough of an industry left that we can slowly rebuild something of a presence.

The arrogance behind ITAR, the assumption that only Americans are smart enough to do anything and the rest of the world will grind to a halt without our beneficence, is revolting enough. That it’s self destructive should be enough to make it go away now that the first premise has been shown to be untrue. But Washington’s track record in arrogant self-destructiveness doesn’t give me much hope that it will go away any time soon.

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