Author: Burris, Matthew D
Date published: January 1, 2010
Journal code: FAFL
I. INTRODUCTION .................................................................................... 257
II. ON THE BATHWATER WE AGREE, BUT WHAT OF THE BABY? THE Current Debate Over U.S. Commercial Satellite Export Control Reform .............................................................................. 269
A. The Players ................................................................................... 270
1. The Congress .......................................................................... 271
2. The Administration ................................................................. 272
3. The U.S. Industrial Base ......................................................... 273
4. Think Tanks, National Security and Space Commentators .... 276
a. 2008 CSIS Study .............................................................. 276
b. Beyond "Fortress America" ............................................. 278
5. The Advocacy Coalition ......................................................... 279
B. On This We Agree: Common Ground in the Reform Debate ....... 280
1. The Need For Reform ............................................................. 280
a. Globalization .................................................................... 280
b. The USML ....................................................................... 283
c. With a Little a Little Help From My Friends: Multilateralism, Coercion, and Concession ..................... 286
2. Absurd Outcomes Make a Fool of the Law ............................ 290
a. ITAR's $640 Toilet Seat .................................................. 291
b. Absurdity's Effect on Policy Makers ............................... 292
3. Space Capabilities Are Developing Elsewhere - Why? .......... 295
a. Market Changes ............................................................... 296
b. Independence from the U.S .............................................. 298
c. Pride and Profit ................................................................ 299
C. Points of Contention: They Might be Windmills, They Might be Giants ............................................................................................ 300
1. Export Control Reform: Deregulation Wrapped in the Flag ..... 300
2. The Space Industrial Base: Burdened, Opportunistic, or Both? 302
a. "Arsenalizing" an Industry? ............................................. 302
b. Where's the Beef? Examining the Evidence in the Reform Debate .............................................................................. 305
(1) The DoD 's Defense Industrial Base Assessment ....... 305
(2) Unanswered Questions, Untapped Resources ........... 307
3. Overstatements in the Export Control Reform Debate ........... 313
a. One Size Fits All .............................................................. 313
b. American Exceptionalism? .............................................. 3 14
III. "Whereof What's Past is Prologue, What to Come, In Yours and My Discharge": The Future of the U.S. Commercial Satellite Export Control Regime ............................................... 316
A. Pending Reform Legislation Before Senate .................................. 316
1. Improving License Processing Metrics .................................. 317
2. Ensuring Adequate Staffing for the DDTC ............................. 317
3. Periodic Review of the USML ................................................ 318
4. Transparency in the DDTC Licensing Process ...................... 318
5. Granting the President Authority to Remove Commercial Satellites from the USML ....................................................... 319
B. The President's Export Control Reform Agenda .......................... 319
1. The Four Singles .................................................................... 321
2. Phases of Implementation ...................................................... 323
IV. CONCLUSION ....................................................................................... 324
United States (U.S.) strategic export controls - which treat commercial satellite technologies, related technical data, and defense services as munitions subject to the strictest export control criteria - have been under fire for decades.1 Critics argue that in attempting to bolster national security by limiting the transfer of space technologies to adversaries and potential adversaries, the United States has unintentionally and paradoxically harmed national security by undermining the space industrial base and the international partnerships that drive scientific and technological advancement.2
"At the most basic level, the export control debate represents the age-old tension between commercial and national security concerns."3 Ideally, export controls seek to strike the appropriate balance between economic and national security interests.4 These counterposing policy interests are not static and so the balance tends to shift as the primacy of national security ebbs and flows.5 The national security interests implicated involve keeping space technologies out of the hands of adversaries or potential adversaries; the economic interests implicated involve the financial health of the indigenous space industrial base.6 It follows that barring the export of space technologies in toto would harm the space industrial base because it would limit sales to U.S. customers only. As one U.S. congressman put it, "[i]f we are not able to sell... products to the broadest possible market, the global market, then our competitors will rise up, meet those needs and suddenly their innovations are outpacing ours."7 Conversely, in the absence of export controls, space technologies would undoubtedly end up in the hands of adversaries or potential adversaries.8 While such a policy would inure to the benefit of the space industrial base, at least in the short term, it would clearly be detrimental to national security - hence the need for a balance.
While the "balancing" analogy is useful for describing the interests at stake, the implementation of export controls are perhaps better understood this way: the greater the national security interest implicated by the export of a given technology, the higher the regulatory hurdles associated with export ofthat technology (See Figure 1, infra). For space technologies, these regulatory hurdles include registration of the exporting entity with the U.S. government (USG) regulator and pre-export licensure of the exported technology by the USG. If the national security threat is sufficiently high, the export is prohibited, irrespective of the potential economic interest at stake.
Striking the balance between national security interests and economic interests during the Cold War, which was marked by U.S. and Soviet hegemony in space and nonexistent, then nascent commercial space markets, was fairly straightforward: best the Soviets at all costs.9 With the exception of détente in the 1970's, the nation's resolve was solidified by the threat of nuclear holocaust.10 As a result, national security prerogatives - namely, space and arms superiority - were at the fore, with economic interests playing only a minor role.11 Ronald Reagan's 1988 National Space Policy, which coincided temporally with the Space Shuttle Challenger disaster, the emergence of Glasnost and Perestroika in the Soviet Union, and the maturation of the relevant space technologies, was the first to not only recognize a distinct commercial space sector, but to offer it support.12 However, that support has not been unfettered in the intervening decades. Globalization and other emerging threats quickly filled the void left by the threat of nuclear holocaust. As the U.S. hegemonic reign in space waned and robust multi-billion-dollar international commercial space markets emerged, striking the balance between national security interests and economic interests proved increasingly difficult for U.S. law- and policymakers. This difficultly is evident in the retrograde legislation and piecemeal statutory and regulatory reforms made to the export control regime during this time, none of which have squarely addressed the paradigm shift that has occurred. As Brad Sherman, the Chairman of the House Subcommittee on Terrorism, Nonproliferation, and Trade put it, "[o]ur current export control policy was designed decades ago. Since then technologies have changed, the Cold War is over, and yet our export control regime remains pretty much unchanged."13
The U.S. Department of State (DoS), which assumed responsibility for regulating the munitions trade in 1935, is charged with ensuring that strategic exports support both national security and foreign policy prerogatives.14 As early space technologies were treated as munitions,15 the DoS was therefore responsible for controlling the export of those technologies.16 The DoS maintained this responsibility throughout the Cold War. In 1992, with the Cold War over, responsibility for the export of some "dual-use"17 commercial communication satellites (COMSATs) was transferred from the DoS to the U.S. Department of Commerce (DoC).18 These COMSATs were placed on the DoCs Commerce Control List (CCL), within the Export Administration Regulations (EAR),19 promulgated pursuant to the Export Administration Act (EAA).20 Then, from 1996 to 1999, all COMSATs were placed on the CCL.21 The presumption under the EAR was to approve proposed exports of commercial satellites, components, and related services.22 This presumption aligned with the DoCs charter to promote and regulate U.S. economic interests abroad.23 It also arguably reflected the policy decision to regulate these items as dualuse commodities rather than as munitions.
The dual-use moniker does not mean the technologies exported are innocuous. A commercial satellite, for example, can be used for nonmilitary purposes such as imaging the surface of the earth for Google Maps or for military purposes such as imaging an adversary's military installations for intelligence, surveillance, and reconnaissance (ISR) purposes. It follows that the transfer of certain advanced commercial satellite technology to certain countries may give rise to national security concerns.24 Such was case in the mid-1990s. At that time, two U.S. firms, Hughes Electronics (Hughes) and Loral Space (Loral), transferred technology to the People's Republic of China (PRC) as part of the launch of U.S. COMSATs without first seeking the appropriate export licenses (i.e. the approval of the USG).25 The transfers, which may have improved the capabilities of the PRCs intercontinental ballistic missile (ICMB) fleet,26 occurred as a result of several failed launches of the PRCs Long March Rocket - the vehicle set to deliver the U.S. COMSATs into orbit. In transferring the technology, Hughes and Loral improved the chances of a successful launch of their satellites, but arguably damaged U.S. national security in the process.27
As a result of these incidents and the recommendations of the Cox Committee, which produced a report on the activities of Hughes and Loral, Congress passed the Strom Thurmond National Defense Act for Fiscal Year 1999 (STNDAA for FY I999),2* which transferred regulatory responsibility for COMSATs and related components back to the DoS. Once again designated as munitions, these items were regulated by the United States Munitions List (USML), under the International Traffic in Arms Regulations (ITAR),29 promulgated by the DoS pursuant to the Arms Export Control Act (AECA).30 And so it remains today. The current statutory and regulatory framework is detailed in figure 2, infra.
Unlike the EAR, the presumption under the ITAR is to disapprove proposed exports of commercial satellites, components, and related services31 - though, as we shall see, this rarely occurs in reality. Nearly every transfer of technology related to commercial satellites requires a license from the Directorate of Defense Trade Controls (DDTC) within the DoS.32 This is true of transfers of tangible items (i.e. export or temporary import), as well as any communication (i.e. oral or written) related to the affected technologies.33
In addition to being a relic of the Cold War, critics of the current export control regime claim it is overly broad in the satellite technologies it regulates, including items widely available on the commercial market.34 For example, an oft-repeated anecdote made by proponents of export control reform is that the U.S. is the only country that regulates commercial satellites as munitions - that the controls are sui generis.35 As we shall see, however, this is a demonstrably false notion. It is also argued that the USML and the bureaucratic mechanisms in place to update it are inflexible and therefore unsuited to regulate technologies that are considered "high" today and "low" tomorrow;36 the DDTCs licensing process is burdensome and, for some companies, cost prohibitive;37 the regime is not reflective of the realities of globalization or technological advancement;38 and that the ITAR undermines international cooperation in space by failing to adequately distinguish between allies and adversaries in its application.39
As a result of these criticisms, the regime has been called "broken," "anachronistic," "self-defeating," "pernicious," "toxic," "regulation run amok," "obsolete, arrogant, and counterproductive," and a "byzantine amalgam" of bureaucracies."40 The Government Accountability Office (GAO) has designated export controls as a "high-risk area" that "warrants a strategic re-examination of existing programs to identify needed changes and ensure the advancement of U.S. interests."41 The Department of Defense's (DoD) 2010 Defense Quadrennial Review Report indicates the current export control regime "poses a national security risk" for being overly complicated, excessively redundant, and attempting to protect too much.42 By any objective standard, the regime has been pilloried.
Critics of the current export control regime and those calling for reform include: the President and relevant members of his Cabinet,43 a bipartisan coalition of House Congressional Representatives,44 the space industrial base,45 think tanks,46 and foreign allied space interests.47 There are few, if any, unequivocal supporters of the regime as it stands. As a result, both legislative and regulatory reform initiatives have recently been introduced. The proposed legislative reforms include, inter alia, granting the President the authority to remove COMSATs from the USML.48 The ambitious reform agenda being pursued by the Obama Administration, which includes both regulatory and legislative reforms, would dismantle the current export control regime and replace it with something quite unlike the statutory and regulatory framework detailed in Figure 2, supra49
Yet this begs the question: if the problems are and have been so apparent, why have the regulations and concomitant organic legislation not been subject to reform before now? What has been the cause of this decades long paralysis? The probable answer brings to mind a quote by H.L. Mencken, who wrote, "there is always a well-known solution to every human problem: neat, plausible, and wrong."50 The interests invoked in this reform debate are independently complex and inextricably interconnected. Indeed, national security and economic interests necessarily invoke military and strategic imperatives, foreign policy concerns and obligations, industrial and technology base issues, and domestic political considerations. Add to this litany the unknowns - such as the present and future capabilities and intentions of enemies or potential enemies and the unpredictability of second, third and forth-order effects - and it is easier to see why reform, meaningful or otherwise, has yet to take shape. An admittedly imperfect status quo may simply be easier to countenance than an uncertain future marked by change. To be sure, "[t]he tendency in a bureaucracy is to play it safe."51
Stasis aside, identifying the parts of the regime that are actually in need of reform is critical to the debate. To paraphrase the allegory of the windmills from Don Quixote52 - it is necessary, before identifying the appropriate way forward, to distinguish the windmills from the giants. For example, is the U.S. space industrial and technology base really in danger of forfeiting its dominant position in the space arena if reforms are not made or is its Pavlovian response to calls for deregulation wholly predicable of industry in general and minimally related to its future viability? If it is in danger of forfeiting its dominant position, is that wholly or partially attributable to the ITAR? Are the compliance costs and administrative hurdles associated with obtaining a DDTC license to export really that onerous under the current export control regime? If one accepts that the compliance costs and administrative hurdles are sufficiently onerous as to necessitate reform, would the reforms suggested in the current debate make these hurdles discernibly less onerous? And what of the Chinese? What is to be made of their dramatic and, in some respects, ominous advances in space? Is the emergence of a putative near-peer space power, whose intentions are for the most part unknown, enough to derail export control reform?53 Is "ITAR-free" really a long-term strategy the Europeans want to pursue considering the dependence of the European defense industry on DoD contracts?
In recent years there have been no shortage of assessments (polemics, really) purporting to separate the windmills from the giants. Nevertheless, questions remain. Are these assessments and the conclusions therein based on hard and attributable empirical data or merely anecdotal evidence? What is being measured and what is the measuring stick? Are the assessors themselves making pure intellectual judgments about the export control regime or are they constituent parts of an advocacy coalition pursuing a similar reform agenda? While many of the assessments offer seemingly straightforward fixes to readily identifiable problems, given that this is a "high-risk area", it is necessary to ask whether these are the types of solutions Mencken warned against - neat, plausible and wrong. What are the possible second, third, and fourth-order effects of these policy decisions? Is there an echo chamber effect occurring - in that a few potentially unrepresentative examples of the regime producing absurd outcomes are repeated often enough to give the impression of the regime's utter dysfunctionality?54 In other words, conflating windmills with giants.
In this article, I will attempt to deconstruct the current discourse (keeping in mind its historical underpinnings) and challenge the orthodoxies of the export control reform debate in order to determine, to the extent possible, the merits of individual arguments and claims - i.e. distinguishing the windmills from the giants. My primary focus will be on the intersection of law, policy, and politics. To be sure, to understand the law and improve it, it is imperative to examine fully the underlying policies and politics relating thereto.
II. ON THE BATHWATER WE AGREE, BUT WHAT OF THE BABY? THE CURRENT DEBATE OVER U.S. COMMERCIAL SATELLITE EXPORT CONTROL REFORM
In his 1991 book, US Strategic Trade: An Export Control System for the 1990s, the late Senator John Heinz called for the wholesale reform of the U.S. export control regime claiming, "[t]his country can no longer afford the status quo."55 Calling on assessments from both inside and outside the USG, Senator Heinz concluded that the U.S. national security export control system, developed in response to the hegemonic struggle between the U.S. and the Soviet Union, was ill-suited for the challenges of the future - specifically, the 1990s.56 The following considerations are among those which led the Senator to this conclusion: the loss of U.S. dominance in the high technology marketplace;57 globalization, commoditization, and foreign availability of advanced technologies;58 the paradoxical national security threat posed by export controls which do not take into consideration the health of the technology and industrial bases (which Senator Heinz called "economic security");59 the "designing out" of U.S. parts and components (a foreshadowing of today's ITAR-free movement); the need to reduce unilateral controls, while strengthening multilateral controls;60 the failure of the export control regime to keep pace with ever-evolving technological developments;61 export licensing delays and an unpredictable interagency review process;62 the more favorable export control policies of foreign governments;63 the notion that the U.S. export control system is the most restrictive in the world;64 and the fact that, due to U.S. export controls, the U.S. is seen as an "unreliable exporter."65 These conditions, Senator Heinz opined, rendered obsolete the U.S. export control regime and portended the need for reform.
This rather lengthy recitation of a 20-year-old book on the topic of U.S. export controls is offered to foreshadow the fact that very little about the export control reform debate has changed in the last two decades. Neither were Senator Heinz' views unique at the time. Indeed, the National Academy of Science, in a 1987 book entitled, Balancing the National Interest: U.S. National Security Export Controls and Global Economic Competition, reached many of the same conclusions.66 As will become clear in the coming pages, the export control reform debate is rhetorically frozen in time. None of this is to suggest that Senator Heinz' conclusions, or the assessments underlying those conclusions, have been proven erroneous simply by the passage of time. But what of the Senator's assertion, "this country can no longer afford the status quo!" The status quo of 1991, by and large, remains the status quo today. This begs the question: is there evidence to suggest that the U.S. paid a price during the last 20 years as a result of the status quoi For example, have ITAR-controlled space technologies fallen into the hands of enemies or potential enemies as a result of the export control regime? Has the capacity of the U.S. to produce cutting-edge space technologies diminished? How has the space sector of the technologic and industrial base fared during this period? How have U.S. competitors in space fared during this period? When present day claims reminiscent of Senator Heinz' are made, such as, "the committee's findings confirm the urgent need for fundamental policy change to counteract the harm that is being done to national security and economic prosperity by national security controls adopted in the 1960s and 1970s that reflect Cold War-era policies,"67 the urgency of the claims must be weighed against the reality that the status quo has faced the same attacks for more than two decades.
A. The Players
The export control reform debate is perhaps best summed up by the following headline, which appeared in the online journal The Space Review: "Boring but important policy developments."68 Indeed, "...export controls are not issues that provoke the attention of the nation's citizens, and for that reason, have a seemingly 'quiet' impact."69 As a result, those involved in the debate are a relatively small group of interested and affected parties, including: the Congress, the Administration (including the national security and foreign policy infrastructure), affected industry, think tanks, and national security and space commentators. The confluence of several of these groups has resulted in the formation of an advocacy coalition. The role of each of these groups is discussed in turn below.
1 . The Congress
Since July 2007, the relevant committee and subcommittee of the U.S. House of Representatives have held no fewer than six hearings on the topic of export controls.70 The emphasis placed on this subject by the House Committee on Foreign Affairs is likely due in part to the fact that its Chairman, Representative Howard Berman, is both a staunch advocate of export control reform and also represents a congressional district in California, a state home to "61,000 exporting firms and an increasing number of... academic and research establishments [with] significant compliance responsibilities."71 The Chairman of the Subcommittee of Terrorism, Nonproliferation and Trade, Representative Brad Sherman of California, is also a staunch supporter of export control reform and an adherent to the notion that a robust space industrial base that is competitive in the international marketplace is critical to U.S. national security.72 For its part, the U.S. Senate appears content to allow the House to lead the debate on these issues. However, the Senate did recently hold a hearing on two as yet ratified export control treaties with the U.K. and Australia which, if ratified by the Senate, would ease U.S. export control controls with these two countries.73 Congress' role in export control reform is obviously not limited to debate. Comprehensive reform, like that being called for by the Obama Administration, would require legislative changes to both the AECA and the EAA. It should also be noted that the GAO, the watchdog of the Congress, has weighed in on the issue of exports control on a number of occasions over the past decade.74
2. The Administration
President Obama has made clear his intention to reform strategic export controls relating to space technologies. Even before his election, Candidate Obama identified ITAR reform as one of his stated policy goals, indicating that "[o]utdated restrictions have cost billons of dollars to American satellite and space hardware manufacturers as customers have decided to purchase equipment from European suppliers."75 In his 2010 State of the Union Speech, the President announced a National Export Initiative that will, among other things, increase exports through the reform of export controls consistent with national security.76 The President's appointment of Ellen Tauscher, a long-time and vocal critic of the ITAR regime, as Undersecretary of State for Arms Control and International Security (under which the DDTC falls), is also a good indication of his policy aims.77 In yet another foreshadowing of the politics of this debate, the lead spokesperson for reform within the Administration is Defense Secretary Robert Gates. Indeed, Secretary Gates announced the Administration's ambitious export control reform agenda on 20 April 2010 - deriding the current regime as a "byzantine amalgam" of bureaucracies.78 Defense Secretary Gates, at first blush, seems an odd choice to fill this role in light of the fact that DoS and DoC are the lead USG agencies for export controls. However, if the intention of the Administration is to head off the inevitable criticism by national security hawks about the loosening of export controls offense through fundamental reform,79 what better spokesperson to have out in front on the issue than Secretary Gates, who has led the DoD under both the Bush and Obama Administrations? In this respect, the selection of Secretary Gates appears to be a wise political choice.80
3. The U.S. Industrial Base
Accurately defining the U.S. industrial base for purposes of the export control reform debate is somewhat analogous to defining the term dual-use - the moniker may simply belie a precise definition. The difficulty in defining this group is due in part to the changing makeup of its members. For example, one of the assessments detailed below describes the merger over the past few decades of the military technology base and the commercial technology base into one monolithic technology base.81 This merger reflects the new paradigm of dual-use technologies - that militarily useful technologies are increasingly "spinning in" from the commercial sector. Absent a precise definition, however, there is a risk that affected space interests - for example the COMSAT sector, an oligopoly of several prime contractors and sundry tier-2 subcontractors and tier-3 commodity suppliers - are conflated with non-space interests within the larger reform debate.82 Arguably, the danger with conflation is that the relative health of one facet of U.S. industry is imputed on another, when in fact those two facets might bear little relation to one another. For example, the interoperability problems the U.S. and its allies have encountered with regard to terrestrial weapons systems83 may in fact harm the foreign sales of those terrestrial weapons systems and, by extension, the economic viability of its manufactures. Nevertheless, this harm is not necessarily attributable, absent some evidentiary link, to the export of commercial space technologies or the health of manufactures of space technologies. The interoperability problems of terrestrial weapons systems are nonetheless cited as a reason to reform the current export control system as a whole, which necessarily include controls related to commercial space technologies.
Defining the U.S. space industrial base as it exists within the larger U.S. industrial base is apparently no easy feat either. For purposes of its Defense Industrial Base Assessment of the U.S. space industry, the DoD, using data collected by the Bureau of Industry Security (BIS), sent surveys to 274 companies that ran the gamut of products and services, from spacecraft, to ground equipment, to others.84 Why these particular companies were selected for the survey is entirely not evident from the report. More importantly, the Defense Industrial Base Assessment offers no indication as to whether the surveyed group constituted a statistically representative sample of the U.S. space industry. It is noteworthy, and somewhat ironic, that the DoD did not posit a definition for the "space industrial base" in a report ostensibly created to gauge the health of that base. Similarly, the Space Foundation conducted a survey in 2007 in order to gauge the impact of ITAR on the "U.S. Space Industry."85 While the makeup of that industry was nowhere defined in the resultant report, the Space Foundation nonetheless acknowledged, "because the survey invitees were not selected randomly from the population of U.S. space industry members, the quantitative results cannot be generalized to that population and inferential statistical tests are unsupported. The survey results should be interpreted as intuitive, non-statistical evidence."86 The Defense Industrial Base Assessment included no such caveat to its reported findings - despite having neglected to define the U.S. space industry or randomly select companies from its membership for purposes of its survey. Like the Space Foundation survey, the results of the Defense Industrial Base Assessment should be viewed as "intuitive, non-statistical evidence." As we shall see, however, the various assessments citing the Defense Industrial Base Assessment do not appear to make this distinction - effectively turning "intuitive, non-statistical evidence" into evidence.
The effects of this failure to distinguish various types of evidence - - and the relative certitude of the conclusions to be drawn therefrom - are not innocuous, but pernicious. For example, Ms. Patricia Cooper, President of the Satellite Industry Association (SIA), speaking on behalf of her constituents in industry before the Subcommittee on Terrorism, Nonproliferation and Trade on the issue of export controls reform, testified that ITAR compliance cost the space industrial base $50 million per year and that licensing issues cost as much as $600 million per year in lost revenues.87 The source Ms. Cooper cited for these figures was a 2008 Center for Strategic & International Studies (CSIS) study entitled, Health of the U.S. Space Industrial Base and the Impact of Export Controls (2008 CSIS Study).88 The figures cited in the 2008 CSIS Study originated in the Defense Industrial Base Assessment which, as has been shown, produced "intuitive, non-statistical evidence."89 This scenario brings to mind a quote from the Lewis Carroll's poem The Hunting of the Snark, namely: "I have said it thrice: What I tell you three times is true."90 The fallacy of this logic is evident, as the simple act of repeating something does not make what is said true. However, in practical effect, the veracity of Ms. Cooper's claims were likely buoyed by the multiple sourcing.91 In the end, the Congress was undoubtedly left with the impression that the $50 million and $600 million figures cited were more than mere intuitive non-statistical evidence. To be sure, one congressman cited the same $600 million figure in his opening statement at that very hearing.92 All of this to say that the difficulty in defining and distinguishing affected industry within the export control debate and the failure to distinguish anecdotal evidence from non-anecdotal evidence adds yet another layer of complexity and uncertainty.93
4. Think Tanks, National Security and Space Commentators
There are no shortage of assessments relating to the current export control regime. There is also no shortage of criticism. That is not to say that all of the criticism is as hyperbolic as the litany offered above. Rather, by and large, the assessments deliver a sober set of findings and recommendations for improving the regime. The sphere of influence of at least two such assessments includes policy makers both within the Congress and the Administration.
a. 2008 CSIS Study
The first of these assessments is the above mentioned 2008 CSIS Study.94 On 2 April 2009, Mr. Pierre Chao, a former senior associate at CSIS was called to testify before the Subcommittee on Terrorism, Nonproliferation and Trade, concerning the Study's findings. The chairman of that subcommittee, Representative Berman, sat on a CSIS commission in 2002 that produced a report which also called for the reform of the export control regime.95 Then Representative Tauscher, now Undersecretary of State Tauscher, was also a member ofthat commission.96
In its 2008 Study, the CSIS found that the overall heath of the space industry was good, but that assessment was accompanied by several caveats, including: (1) industry's dependence on national security-related USG contracts for 60% (95% if civil government contracts are included) of its revenue - which the CSIS described as "arsenalizing" the industry; and (2) 2nd and 3rd tier manufactures (i.e. smaller companies, as opposed to the major prime contractors like Boeing) are losing global market share due to the "friction" created by U.S. export controls.97 The latter caveat is supported by the fact that smaller companies typically do not have the resources to maintain an ITAR compliance staff, as do the prime contractors. As Representative Berman lamented in an editorial to The San Jose Mercury News, "[y]ou practically have to have a law degree or Ph.D to keep from running afoul of the increasingly complex export control regime."98 The assumption, therefore, is that smaller companies are less able to navigate the complexities of U.S. export controls in a manner that satisfies foreign customers and are losing global market share as a result. The follow-on argument, which is also the primary contention of The National Academies' Beyond "Fortress America" (discussed below), is that a drop in global market share means less revenue for the 2nd and 3rd tier companies; less revenue, in turn, threatens innovation - the 2nd and 3rd tier being "the source of much innovation;" innovation is a strategic imperative for the U.S. national security; ipso facto: reduced revenue for 2nd and 3rd tier companies threatens national security.99
b. Beyond "Fortress America"
The second such assessment is a 2009 National Research Council (NRC) of the National Academies100 book entitled, Beyond "Fortress America": National Security Controls on Science and Technology in a Globalized World (Beyond "Fortress America").101 The influence of this work is also evident from the congressional record. Not only did Dr. John Hennessy, the co-chair of the committee that produced the book, testify before the Committee on Foreign Affairs with regard to ITAR reform, but Chairman Berman indicated the book was in part responsible for the Committee's reform initiatives.102 In addition, Brent Scowcroft, Dr. Hennessy's co-chair on the committee, was invited to a "secret meeting" in January 2010 on the topic of export control reform.103 The meeting was reportedly organized by Chairman Berman and attended by, among others, Defense Secretary Gates, Commerce Secretary John Locke, National Security Advisor Jim Jones, Undersecretary of State Tauscher, and Mr. Scowcroft.104 It is noteworthy that Mr. Scowcroft appears to be the only attendee at this meeting of principles not currently affiliated with either the Congress or the Administration.
The NRCs thesis is that the "national security controls that regulate access to and export of science and technology are broken."105 The controls are broken not because of the ends the controls seek to achieve, rather because the current unilateral means of achieving those ends does not reflect the "world is flat" reality of modern geopolitics.106 According to the NRC, the new approach to export controls must recognize the interdependence of national security and economic competitiveness - or what the late Senator Heinz called "economie security."107 Again, the argument here is that industry prosperity spurs innovation; innovation is a key to developing technologies more advanced than your enemy or potential enemy, ipso facto, industry prosperity is essential to national security. In order to accomplish this, economic interests should begin to weigh more heavily in determining what should be subject to export controls.108 The question that should be asked in determining what should be controlled is: "do security interests outweigh the harm?"109 Ln application, this would result in the control of "a very narrow and limited set of goods, technology, and knowhow."110
5. The Advocacy Coalition
Marion Blakely, president and chief executive of the Aerospace Industries Association, in response to the announcement of the Obama Administration's export control reform initiative, indicated, "I think it's actually unprecedented that we have this top-down commitment to an issue that is often pushed to the periphery."111 Indeed, it would appear that the "stars have aligned"112 and that all of the stakeholders - including the President and relevant members of his Cabinet,113 a bipartisan coalition of House Congressional Representatives,114 and the space industrial base115 - in the current reform debate are critics of the current regime. Arguably, these stakeholders have formed an advocacy coalition that "consists of actors from a variety of governmental and private organizations at different levels of government who share a set of policy beliefs and seeks to realize them by influencing the behavior of multiple governmental institutions over time."116 Advocacy coalitions are critical to progressing political agendas from conception to policy - whether that policy is implemented via regulation or statute.117
B. On This We Agree: Common Ground in the Reform Debate
1. The Need For Reform
The criticisms levied thus far should not lead the reader to believe the current export control regime is above reproach. To the contrary, these criticisms and those to follow are simply efforts to keep the reform debate honest - to distinguish the windmills from the giants. As will become clear in the coming pages, the export control regime in relation to space technologies is indeed in need of reform. The real issue relates to the extent of the reform and the form taken by it.
The stated goal of the Obama Administration's export control reform effort is '"to build high walls around a smaller yard' by focusing our enforcement efforts on our 'crown jewels.'"118 These metaphors, however, do not capture entirely the complexity of the modern export control environment. Given the exponential rate of technological advancement - described above as "the law of accelerating returns"119 - it has become increasingly difficult to distinguish the crown jewels from the proverbial costume jewelry. For example, the resolution of commercial imaging satellites has gone from 1 kilometer in 1997 (Orbview-2), to .05 meter in 2008 (GeoEye)- with .25 meter projected for 2011 (GeoEye-2).120 Will today's crown jewel, GeoEye, become costume jewelry when GeoEye-2 comes online? Undersecretary of State Tauscher framed the issue thusly: "you cannot protect everything for its life cycle. You can only protect it while it is important to national security."121 This begs the question: when does a technology transition from important to national security to no longer important to national security? The current export control regime does not reach questions this nuanced - at least with regard to its regulatory reach. Instead, high walls are built around all space technologies. This "fortress" approach to controlling exports, in which virtual walls (i.e. export controls) are constructed in order to prevent others from gaining access to those technologies, is only effective as long as the state constructing the walls has a monopoly on the technologies and the know-how to produce those technologies.122 During much of the Cold War, the U.S. held such a monopoly. As the U.S. was largely self-sufficient in developing technologies, it was therefore able to tightly control those technologies for national security reasons.123 U.S. export controls reflected this fact. U.S. export controls also reflected the business model of the day, namely "that a company designed the product, made the product, and sold the product to one end user."124 However, "over the past 30 years, this model has evolved into a global supply chain, including engineering collaboration over the Internet and distribution partners located in countries close to... customers."125 This evolution is indicative of globalization.
Like so many other aspects of this debate, the term "globalization" belies a precise definition. Indeed, "[t]here is no universally accepted definition of what constitutes globalization, which many observers see as primarily an economic phenomenon. But it is more than that - it involves the diffusion (some would say "democratization") of technology, information, economic power, and international influence."126 In spite of this trend towards globalization, until very recently, the U.S. was still able to effectuate its restrictive export control policies on other space competitors. The U.S. possessed a defacto export veto due to the fact that virtually every satellite launched contained a U.S. component or subsystem - thereby subjecting the entire satellite to U.S. export controls (there is no de minimis exception in the ITAR based on minimal U.S. content). For example, a European-built satellite utilizing an ITAR-controlled U.S. antennae could not launch on a Long March Rocket, because the U.S. has effectively embargoed PRC space launch since the passage of the STNDAA for FY 1999. The Europeans viewed this "contamination by American technology" as running counter to their policy interests and thus set about to bust the U.S. space technology monopoly by developing ITAR-free products and satellites.127
Currently, European manufacturers EADS Astrium and Thaïes Alenia both offer ITAR-free space products - with Thaïes Alenia offering ITAR-free satellites.128 Seeing this as a harbinger, Congressman Michael E. McMahon of New York indicated, "I am concerned that if other countries, our allies even, were to develop ITAR-free satellites and become as competitive [as] the United States in this market we would most certainly reach a whole new frontier in global terrorism."129 One commentator has predicted that by 2020, "[n]o matter what the United States does, multipolar space [described as "several global players shaping core space capabilities"] will create new policy realities."130 He continues, "[a]nd as states such as Iran add access to or engagements in mutipolar space capabilities, one gets the sense of how the world will be different a decade out."131 The ITARfree movement and the prospect of the new policy realities resulting therefrom have clearly made an impact politically. Indeed, a senior staffer for the House Committee on Foreign Affairs told a satellite conference in March 2010 that the ITAR-free movement, "has changed the environment... significantly."132 This significantly changed environment may, in fact, lead to the export control reform discussed in Chapter 3. Any such reform will likely begin with the make-up of the USML. To be sure, the current head of the DDTC, Robert Kovac, indicates that "separating the wheat from the chaff on the USML is the key to improving the U.S. export control regime.133
b. The USML
One of the chief complaints about the way space exports and temporary imports are currently regulated is that the ITAR is a blunt instrument that "fails to distinguish between militarily sensitive hardware that should be controlled and widely available commercial technologies, such as lithium-ion batteries and solar cells."134 Indeed, the USML indicates that "spacecraft, including communications satellites, remote sensing satellites, scientific satellites, research satellites, navigations satellites, experimental and multi-mission satellites," as well as "[a]ll specifically designed or modified systems or subsystems, components, parts, accessories, attachments, and associated equipment" and "all technical data and defense services" related thereto, are all regulated as munitions.135 There is no real distinction, for example, between military-grade components and commercially available components. As a result, when the manufacturer of a space qualified lithium-ion battery seeks to export that product to a foreign buyer, the manufacturer must first go through the ITAR registration and licensing process. During this administrative process, license examiners at the DDTC determine whether the item to be exported is, in essence, a "crown jewel" or "costume jewelry." Critics of the ITAR argue this registration and licensing process is hurting portions of the U.S. space industrial base by adding expense and delay to what might otherwise be a simple transaction involving an internationally available commodity.136 The fact that many space technologies are available internationally is a testament to the fact that "R&D and technological innovation are now global in nature."137 A nimble and narrowly tailored regulatory regime would reflect this reality and, in so doing, continue to protect those technologies that need to be protected, while not unduly hampering U.S. manufacturers with superfluous administrative processes.
Is it possible to create a regulatory bureaucracy capable of matching the exponential pace of technological change? 138 The answer to this question will depend almost entirely on the form taken by the USML. It must be acknowledged that while lists are "poorly suited to controlling exports of knowledge or complex systems of vastly different levels of sophistication... lists are also an efficient way - indeed the only way - to keep track of items."139 The identification and removal of those technologies from the USML that pose a de minimis threat to national security - i.e. the costume jewelry - would appear to be a good starting point for reform. This veritable low-hanging fruit might include items like the aforementioned lithium-ion batteries, solar cells and other items that are widely available on foreign commercial markets. It should come as little surprise, however, that even the low-hanging fruit in this debate offer no simple solutions.
The current language of Category XV of the USML is sufficiently broad so as to capture virtually all space-related technologies.140 As a result, exporters and temporary importers of these articles know or should know that a license is required prior to export or temporary import in nearly all instances. This knowledge is critical, given the fact that the effectiveness of U.S. export controls is largely dependent on industry self-regulation. Any attempt to carve out certain technologies from that broad language, whether it is a lithium-ion battery or something else, would require a list that either specifically inventories items covered under the USML or specifically inventories items not covered by the USML. If the aim of the export control regime is to protect only the crown jewels one might presume the list would include only those items covered under the ITAR, rather than excepting items not covered under the ITAR. The former would also arguably result in a shorter list. However, this raises the issue of "the law of accelerating returns" and the concomitant notion of whether a regulatory bureaucracy could ever keep up with rapidly developing technologies. An inclusive list would arguably require constant updating. As the primary mechanism by which industry self regulates is the USML (i.e. checking the list to see if the item or service to be exported or temporarily imported is included on the list), the accuracy of the list is of paramount importance. If the bureaucracy failed to keep up and a new technology not included on the USML was exported without a license or approval by the DDTC, the USG would have little recourse against the exporter or temporary importer. More importantly, the U.S. will have potentially lost a valuable piece of technology that could be employed by its enemies or potential enemies. On the other hand, the broad language currently employed by Category XV of the USML "catches" new technologies by virtue ofthat broad language - no responsive regulatory bureaucracy required. As such, the USML could employ broad language and specifically exclude those items not covered by the ITAR. The length of such a list would depend entirely on the breadth and detail of the exclusionary policy. For example, specific items could be listed (e.g. antennae array with certain characteristics); or categories of items could be listed (e.g. mature technologies widely available on foreign commercial markets).
The clear problem with categories is their inherent vagueness. Exporters and temporary importers of space technologies would arguably be less certain as to the applicability of the ITAR under a given set of circumstances if categorical language was employed. As the GAO has pointed out, the effectiveness of export controls "depends on the exporters making the right decisions when interpreting the regulations."141 All of this leads to the conclusion that if carve-outs are to be made for certain technologies that do not need to be protected, the most workable solution for accomplishing that goal is to employ broad language that acts to "catch" new technologies and specifically catalogue all items to be excluded from the USML. The problem with this approach is that the list will simply grow as more and more items are excluded. This "fix" would therefore exacerbate another identified problem with the ITAR, namely its length and by extension, its complexity.142
This does not appear to be the approach favored by the 2008 CSIS Study. Indeed, the CSIS recommends that, "critical space technologies should be identified and should remain on the Munitions List..."143 It further recommends removing "commercial communications satellite systems, dedicated subsystems, and components specifically designed for commercial use."144 Finally, it calls for an annual review of the USML based on both the "criticality of items and on their availability outside the U.S."145 These recommendations would appear to create an amalgamated list which is both inclusive of the technologies to be protected and exclusive of those not to be protected and which is updated annually. How this amalgamated list might work in practice, given the analysis above is not known. For example, such an inclusive list might fail to "catch" new technologies in advance of the annual update. Would the DDTC then issue an interim list to "catch" these technologies pending that update? Would this not result in a more complex export control regime, rather than one that is less complex? These unknowns highlight two things: first, it is simple, in the rhetorical sense, to say the USML needs to be reformed; second, creating a USML that, in actual practice, is both workable and serves the national security ends of the U.S. is decidedly more difficult.
The NRCs recommendation in Beyond "Fortress America" regarding the reform of the USML is less detailed, but at the same time more radical. Indeed, "[t]he committee recommends a 'sunset' rule under which every item [on the USML] will be taken off the list at a specified time during each calendar year unless a justification can be presented... for maintaining the particular item or category on the list."146 Although no further details are offered with regard to actual implementation, this approach would appear to suffer from the same problem as the CSIS approach, namely: what happens between annual updates when new technologies are introduced? Suffice it to say that proposed reforms must be workable in practice and not just ring true rhetorically.
c. With a Little Help From My Friends: Multilateralism, Coercion, and Concession
As one contemplates reforms for the U.S. export control system, one must be aware of the liabilities that result from divergent international practices and priorities as well as the shortcomings of existing international export regimes.147
Given that the arms trade occurs internationally and on a truly global scale, one might reasonably assume that international law or the United Nations would play a large role in regulating the import and export of arms. That assumption would be incorrect.148 While the export of nuclear, biological, and chemical munitions are strictly prohibited by binding international agreements,149 the export of conventional munitions and dual-use technologies are merely influenced by a number of voluntary international agreements - to include the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies.150 Due to the voluntary nature of these agreements, the export of conventional munitions and dual-use technologies être grounded primarily in the domestic legal regimes of individual states. When multilateral agreements are not seen as adequately protecting the interests of individual states, those states tend to implement unilateral controls that do protect those interests.151 This is due in part to notions of state sovereignty related to trade.152
Unilateral export controls are only effective as long as the state controlling those exports has a monopoly on the technologies and the knowhow to produce them.153 If the technologies and/or know-how are available and uncontrolled elsewhere, then unilateral export controls are not an effective nonproliferation tool. Multilateral export controls, on the other hand, are only effective as long as the countries possessing those technologies and/or the know-how to produce them agree that the technologies and know-how should be controlled. The stronger the degree of consensus among these countries, the greater the legitimacy of the multilateral export control regime.154 Currently, there is a lack of consensus among the parties to the Wassenaar Arrangement with regard to certain commercial satellites and related technologies. The Wassenaar Arrangement is a multilateral agreement governing the export of munitions and dual-use items.155 Forty countries are party to the Arrangement, among them, a majority of NATO and major non-NATO allies of the U.S.156 The Wassenaar Arrangement Dual-Use List includes COMSATs and some remote sensing satellites (below certain thresholds, remote sensing technologies are controlled as dual-use commodities; above a certain threshold, as munitions).157 The U.S., although a party to the Wassenaar Arrangement, controls all of these technologies as munitions. The lack of consensus regarding these technologies has only recently become an issue for the U.S. With the advent of ITAR-free COMSATs, the ability of the U.S. to impose its restrictive view on Europe and others - particularly the embargo on the use of PRC launch services - diminished.158 That does not mean the U.S. is without options. Indeed, "[t]he radical concentration of the world's defense industrial sector... allows the United States a powerful role within the larger international system."159 This concentration affords the U.S., the most prodigious defense spender in the world, a tremendously large carrot with which to dangle before potential antagonists to U.S. export control policy. For example, both EADS and Thaïes, whose subsidiary companies EADS Astrium and Thaïes Alenia produce ITAR-free products, bid for DoD contracts. EADS has bid on the U.S. Air Force's aerial refueling tanker contract (Airbus is a subsidiary of EADS), said to be the largest U.S. defense contract of the next several years with a projected value of at least $35 billion.160 If EADS won the contract, the initial order would include 179 Airbus A330 aerial tanker aircraft. For its part, Thaïes Communication, a subsidiary of Thaïes, "makes military communications equipment at its plant in Maryland, including radios for US troops in Iraq and Afghanistan."161 The U.S could therefore leverage its defense spending to coerce these compames into acting in accordance with U.S. policy ends by threatening to deny them future DoD contracts. Contracts could be denied on the grounds that the parent company and/or its subsidiaries, by defying U.S. export control policy, contravene U.S. national security interests. In fact, this has already occurred. In 2008, the Congress included a proviso in a defense spending bill162 that could effectively punish European ITAR-free manufactures who side step the U.S. embargo on the use of PRC launch services, by allowing the Secretary of Defense to deny future or suspend current U.S. defense contracts to those manufactures.163 While it does not appear this proviso has affected any DoD contracts to date, coercive measures such as this may be a harbinger.164 In the near-term, this type of measure is seemingly the only arrow remaining in the U.S. quiver when it comes to controlling space technologies that are not monopolized by it. It would appear, therefore, that multipolar space has already created new policy realities.165
A long-term solution is more elusive. What is apparent is that the U.S. must attempt to forge consensus in this realm by another means. Why? Because "[h]istory has proven that hostile regimes have managed to penetrate U.S. export controls network due to the fact that the international community has yet to follow suit with similar export controls of their own"166 It would appear the U.S. is, at least with regard to COMSATs, opting for a conciliatory approach - forging consensus through concession. Rather than attempting to impose its restrictive view of export controls on a recalcitrant Europe, the U.S. appears poised to comport its export control regime to the European standard (which also largely happens to be the Wassenaar Arrangement standard). One need look no further than H.R. 2410, specifically the provision granting the President the authority to remove commercial satellites from the USML, for evidence of this.167 It remains to be seen whether the President or Congress will propose further steps to bring the U.S. and European export control regimes in line. It also remains to be seen whether this apparent shift will improve U.S. national security or lead to another breach of national security, as occurred with the PRC in the 1990s.
The Canadian ITAR exemption offers a counterpoint to this conciliatory approach. Some ITAR-controlled items - to include COMSATs - are exempt from the licensing process when the export or temporary import involves Canada. "The Canadian exemption is the only country-specific exemption to the [ITAR] licensing requirement."168 The exemption, which has existed in various forms since 1954, grew out of the special relationship between the U.S. and Canada, which are not only each other's largest trading partner, but also share a common interest in the defense of North America.169 While the relationship with Canada is geographically unique, it is not ideologically unique. In that regard, the U.S. and the U.K. also share a special relationship - a notion first advanced by Winston Churchill following WWII. The same could be said for many other countries, to include, inter alia: Australia, New Zealand, Japan and South Korea. This begs the question: why is Canada the only U.S. ally afforded such an exemption? Canada is certainly not the only country singled out by the ITAR. Indeed, NATO and major non-NATO countries receive preferred treatment under various circumstances. However, these countries have not been exempted from the ITAR because of the AECA requirement that their respective export control regimes be brought in line with the ITAR.170 The need for an alignment of export control regimes was highlighted in the late 1990s when multiple instances of "re-export" and diversion occurred under the Canadian exemption.171 This occurred when items exported under the Canadian exemption were subsequently re-exported or diverted to countries like China, Iran, and Pakistan, because doing so was not proscribed by Canadian law.172 Clearly, U.S. policy was subverted in those instances. Canada subsequently aligned its export controls with those of the U.S. and the exemption was allowed to stand.173
2. Absurd Outcomes Make a Fool of the Law
One reason the U.S. export control regime is so easily criticized is as a result of the truly absurd outcomes it can sometimes produce. Because absurd outcomes are interesting simply by virtue of being absurd, they are often repeated. This repetition can in turn produce the impression of the regime's utter dysfunctionality. An utterly dysfunctional regime is more likely to be deemed in need of fundamental reform, when in fact, it may only be in need of minor reforms. Indeed, absurdities make for particularly compelling strawman arguments. For example, in the 1980s, U.S. public opinion concerning defense spending was galvanized by the revelation that the DoD procured individual toilet seats and hammers for $640 and $435, respectively.174 The absurdity of these figures painted a picture of excess and waste that no $2 billion B-2 bomber procurement could. To be sure, putting a dollar value on a B-2 is beyond most people, but everyone knows that a hammer costs no more than a few dollars at any hardware store. As no one inside or outside of the USG could defend the procurement of a $640 toilet seat or a $430 hammer, it became the perfect strawman argument for those advocating across the board cuts in defense spending. For this reason absurd outcomes can become rallying cries for those with a reform agenda. That was true in the 1980s with regard to defense spending and it is also true today with regard to export controls.
a. ITAR's $640 Toilet Seat
...U.S. Regulation Requires Spacecraft Stand, Indistinguishable From Common Coffee Table, to be Placed Under Armed Guard in Russia. . . While this headline is fictitious, it reflects actual events, and is an example of the absurd outcomes the ITAR can produce. The events involved Bigelow Aerospace, a U.S. manufacturer of inflatable spacecraft. Bigelow's attorney, in response to this requirement, responded sarcastically, "[o]ne can only imagine the repercussions of Russian agents gaining access to the [spacecraft stand]. Its secrets could have easily been sold to Iran or North Korea, where America's enemies could someday use such technology to serve sandwiches or even tea on."115 The story was subsequently picked up by The Economist (on multiple occasions) and Newsweek - and has since been repeated in academic journals.176 Indeed, it is arguably ITAR's version of the $640 toilet seat - in that the outcome produced is indefensible from both a policy perspective and a logical perspective. The question must therefore be asked: Why did this occur?
The Bigelow spacecraft, along with the spacecraft stand, was exported to Russia for launch by ISC Kosmotras, a commercial space launch venture.177 The requirement to guard the spacecraft stand stemmed from the fact that it was specifically designed to hold Bigelow's inflatable spacecraft in a vertical position.178 As a result of the broad language of USML Category XV(e), namely "[a]ll specifically designed or modified systems or subsystems, components, parts, accessories, attachments, and associated equipment" the spacecraft stand/tea table became a munitions regulated under the ITAR.179 Moreover, the technical assistance agreement associated with the export of the spacecraft stand required that it be placed under armed guard around the clock. The expense associated with the armed guards was borne by Bigelow Aerospace. Perhaps the only thing that might have made matters worse, was if those hired by Bigelow to guard the spacecraft stand were found, "sleeping on the job," "[Reporting to work under the influence of alcohol," and taking "routine trips into town to meet prostitutes," as those in the Hughes case of the 1990s were.180 While Bigelow was ultimately granted a waiver by the DDTC regarding the requirement to guard the spacecraft stand,181 the case nevertheless brings to life Defense Secretary Gates' admonition, "he who defends everything, defends nothing."182 Inverted coffee tables are certainly not among the "crown jewels" the U.S. should seek to protect via export controls. At the same time, this absurd outcome does not, without more, necessitate the wholesale reformation of the export control regime. Instead, excluding items like Bigelow's spacecraft stand from the USML would arguably be sufficient to remedy this absurdity.
b. Absurdity's Effect on Policy Makers
The scenario involving Bigelow Aerospace is not unique. The following excerpt from a 26 March 2007 hearing before the Subcommittee on Terrorism, Nonproliferation and Trade is illustrative:
Mr. MANZULLO (Congressman from Illinois): ...Let me give you an example of the problems. This connecting cable is ITAR regulated [holding up a cable]. This one is not [holding up another cable]... the bad guy is 1 inch shorter. There has to be a way to export these things without going for a license. These are two fasteners, the one on the right is ITAR regulated the one on the left is not even on the CCL list. This is absurd. This is why you have so many licenses. This is why there has to be a complete reorganization and restructuring of the system by which American manufacturers can be competitive, because if our guys have to go through all the licensing to sell this, foreign buyers will say I can get this somewhere else.1*3 [emphasis added]
Though effective rhetorically, the logic of Congressman Manzullo's argument is faulty on two counts. First, the claim that "a complete reorganization and restructuring" of the ITAR is required does not logically flow from the evidence presented (i.e. two similar connecting cables and two similar fasteners). Indeed, the apparent absurdity of having two similar items treated differently could be remedied by a USML that either treats both items similarly or simply excludes both items. Updating the USML would not require a complete reorganization and restructuring of the ITAR, but would arguably achieve the same ends. Second, the leap from licensing to the resulting lack of competitiveness of U.S. manufacturers is made without any supporting evidence. This is common in the export control reform debate - claims about the adverse effects of ITAR are made, without evidence being offered to support those claims.184 Alternatively, when evidence is presented, it often turns out to be anecdotal - as in the case of the DoD' s Defense Industrial Base Assessment }i5
Later in the same congressional hearing the actual complexity of the debate was revealed in an exchange between Congressman Manzullo and Ambassador Stephen Mull, then Acting Assistant Secretary of the DoCs Bureau of Political-Military Affairs:
Mr. MANZULLO. Another question is when you have something as simple as this fiber optic cable, which is really a wiring harness, which has many applications, how does something like this end up being on the ITAR list in the first place? Anybody know?
Ambassador MULL. I will try to answer it. Of course, the examples that you showed are very, very compelling [i.e. the two similar connecting cables and two similar fasteners]. And it does suggest that maybe these on the surface appear that these decisions might be made capriciously or without very much thought. But, in fact, the ITAR is very much driven by parts, by things, and so when something goes on the ITAR list, it is because it is useful in a particular part, so that I am not dealing with that particular piece of equipment, but one could imagine a situation where that specific wire fits exactly on an F-14 -
Mr. MANZULLO. But do you know what
Ambassador MULL [continuing]. Which are only used by Iran.
Mr. MANZULLO [continuing]. If you put the longer version on it also, it will still fit with just a little slack.
Ambassador MULL. But if a piece of equipment is designed for an airplane, a fighter plane, that in today's world only Iran is using, we have an obligation according to our interpretation of the law to restrict that.
Mr. MANZULLO. But that is the problem. I mean, this is bread- and-butter stuff. I mean, this is Radio Shack staff. I mean, this is the stuff that is made in America, and these manufacturers really don't know how to sell this. I can't defend what you just said; I really can't, because this is not controlled at all [holding up a connector cable]. This is - take out 1 inch, and it fits [holding up a connector cable]. Can you explain that?
Ambassador MULL. But the one that is shorter... is designed only for use in sensitive military technology that our enemies could use.
Mr. MANZULLO. No, it is just the length of it. I mean, this is the same thing. You measure it off, and you put it in there. If you want to, you know, you could just snip off an inch here and just move it up. I mean, this is the problem. I mean, this is why there is so much angst. I can't see how you can defend this, Ambassador. For the life of me it is the same thing. What happens if it is on a spool that is 100 feet long; what do you do in that case?
Ambassador MULL. Again, sir, we look at the item. If it is designed specifically for use in sensitive equipment, we believe the law requires us to regulate that.186
This exchange highlights several key facets of the export control reform debate. First, it highlights the complexity of controlling dual-use technologies when the distinction between the military version of the technology and the commercial version of the technology is, by all appearances, a distinction without a difference. From a common sense perspective it is difficult to disagree with Congressman Manzullo's point. From a philosophical perspective, the issue is less clear. Is the U.S., as part of its foreign policy, prepared to countenance the arming of its enemies or potential enemies simply by virtue of the fact that a similar piece of technology is available on the commercial market - whether foreign or domestic? For example, would the actions of Hughes and Loral in the 1990s, which potentially improved the reliability of the Chinese ICBMs, have been acceptable if the information they provided to the PRC had, at the time, been available sans license from France? There is something deeply unsettling about the notion of U.S. indigenous technology coming back to harm Americans. This notion should not be far from the minds of policy makers when decisions are made concerning the makeup of the USML.
Second, the exchange highlights how effectively absurdity can obfuscate the important issues at stake. For someone not cognizant of those issues, the demonstrative aids employed by Congressman Manzullo were likely effective at driving home his point. Indeed, much like the $640 toilet seat that everyone knows represents little more than a fleecing of taxpayers, anyone could look at the two connecting cables and see that there was only a one-inch difference between them. At the same time, much like the valuation of a B-2 bomber, which very few people are able to pinpoint, most people do not have the expertise to determine whether the tolerances of U.S.-built Iranian F-14s are such that both wires would function similarly in the aircraft. It is unlikely Congressman Manzullo does either - but that expertise is not a prerequisite for rhetorical victory.
3. Space Capabilities Are Developing Elsewhere - Why?
There is no disputing the fact that other nations are making significant advances in the realm of space technologies. Indeed, "there are at least 43 states that possess their own satellites and 12 spacefaring states with the indigenous capacity to launch their own satellites."187 The relevant question, for purposes of the export control reform debate, is the degree to which ITAR is responsible for this turn of events. Several arguments have been advanced in support of the notion that the ITAR is partially responsible.
During a hearing before the House Subcommittee on Terrorism, Nonproliferation and Trade, Congressman Gerald Connolly put the following question to the panel of witnesses called to testify on the effect of export controls on U.S. satellite technology: "in 1997, U.S. companies controlled 65.1 percent of the world satellite manufacturing market. By 2007 that was down to 41.4 percent. To what do you attribute the decline?"188 In response to Congressman Connolly's query, Pierre Chao, former Senior Associate for the CSIS, posited, "[t]here are a lot of factors and people will just push back and just say you can't blame export controls, and that is a true statement. . . But if we didn't find the smoking gun [in the 2008 CSIS Study199], we at least got a whiff of gun powder... to the extent that in specific cases you saw customers saying that I will not buy from America now because of ITAR."190 The ITAR-free movement in Europe would seem to lend support to this contention.191 The Prime Minister of India has also indicated that the ITAR' s "anachronistic restrictions" has spurred his country's space industry to new heights.192 The analysis should not rest on these anecdotes, however. Rather, it is necessary to examine what some of the other reasons countries might have for developing indigenous space capabilities, and for that matter, the reasons some countries might have for perpetuating the notion that ITAR is "toxic."193
a. Market Changes
The change in U.S. policy towards COMSAT exports, epitomized by the STNDAA for FY 1999, coincided temporally with several major changes in the global COMSAT market. Prior to the bursting of the telecom bubble in the late- 1990s, there was an expectation that advances in space technology would increasingly be fueled by the commercial space sector, thereby allowing the USG to scale-back its investment in this realm.194 When the bubble burst those expectations were dashed. Somewhat paradoxically, while the reliance on commercial technologies enabled by space has continued to increase, the industry has nonetheless been plagued by overcapacity across all sectors.195 Overly optimistic predictions of future bandwidth requirements as well as a nine-fold improvement on the capabilities of new satellites over those launched in the mid-1990s (e.g. law of accelerating returns), led to this overcapacity.196 Other market changes occurring during this time period include: (1) the spin off of COMSAT operators from COMSAT manufacturers around the year 2000 (manufactures now compete for contracts from those operators, rather than having a "captured customer"); (2) privatization and consolidation of satellite operators, also occurring around the year 2000 (orders have been scaled back or cancelled and contracts are not "spread around" as when they were "captured customers"); (3) an increase in the number of foreign COMSAT customers; (4) an increasing number of states with indigenous COMSAT manufacturing capabilities (i.e. more foreign competitors);197 and (5) a downturn in the global economy resulting in the COMSAT market "hitting rock bottom" in 2002, when only nine contracts were awarded.198 Prior to 1999, the U.S. won an average of 80% of the 15-25 competitive199 COMSAT contracts awarded per year; that number dropped to around 60% by 2006.200 Because this drop coincided temporally with the change in U.S. policy toward COMSAT exports, ITAR has shared a portion of the blame.201 However, a 2007 USG-commissioned study of the impact of export controls on the U.S. space industry determined that an analysis of the quantitative data on the industry revealed that "a compelling case could not be made that differential application [as compared to foreign competitors] of US export controls account for loss in US market share."202 Instead, the study pointed toward rising foreign competency and natural market cyclicality as the likely cause of the loss.203
Given the complexity of the market factors at play, as well as the other factors discussed below, an accurate apportionment of blame for the drop in U.S. market share remains elusive. This, in turn, perpetuates the argument that the ITAR is toxic as such an argument is difficult to rebut. Indeed, to do so requires an opponent to engage in a counterfactual debate (i.e. what would the market look like in the absence of the ITAR?).204 Putting that aside, the U.S. is still the competitive leader in commercial space by a wide margin - this "despite perceived export control burdens" and major market changes.205
b. Independence from the U.S.
"Commitment toward independence from the U.S. in space is a common thread across all sectors."206 The Galileo project - Europe's answer to the Global Positioning System (GPS) - exemplifies this commitment.207 At stake is strategic independence from the U.S., both economically and militarily.208 Indeed, the fielding of the Galileo constellation will quell long-held European fears that the U.S. might restrict or otherwise disrupt GPS services should the strategic interests of the U.S. compel that result. The desire for independence, whether in Europe or elsewhere, should come as no surprise to the U.S. In fact, the U.S. is currently embroiled in a debate about its own lack of independence from foreign sources of space technologies. For example, the Atlas V rocket - the only U.S. commercial launch vehicle in its class - is powered by a Russian RD- 180 engine.209 Similarly, with the pending retirement of the Space Shuttle, it appears the U.S. will for a time be reliant on Russian space launch to send U.S. astronauts to the International Space Station (ISS).210 In the event Russia determined that it no longer wished to supply engines for the Atlas V rocket or seats for U.S. astronauts, the capacity of the U.S. to operate in the strategic medium of space would be diminished. That diminished capacity could, in turn, easily be characterized as a national security threat. If U.S. reliance on foreign providers of space technologies and services could be deemed a national security threat, why would the same not be true of other countries? To be sure, the development and maintenance of indigenous space capabilities is not solely a strategic imperative of the U.S.211
e. Pride and Profit
On 25 May 1961, President John F. Kennedy declared, "I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth."212 This was an exceedingly bold declaration given the fact that the Mercury capsule carrying Alan Sheppard, the first American in space, had successfully returned to Earth less than three weeks prior. President Kennedy continued, "[n]o single space project in this period will be more impressive to mankind..."213 When Neil Armstrong uttered the immortal words, "[t]hat's one small step for a man, one giant leap for mankind" on 20 July 1969, President Kennedy's sentiment was realized. Indeed, putting a man on the moon is without question one of the greatest accomplishments in the history of mankind - and a tremendous source of pride for the U.S. as a nation. No less a sense of national pride is experienced by other nations' forays into space.214 This is arguably true of the PRC becoming only the third country, behind the former Soviet Union and the U.S., to place an astronaut into orbit;215 India sending a unmanned spacecraft to orbit the moon;216 and the indigenous launch capacity developed by Japan and Israel,217 to name but a few. In addition to pride, becoming a spacefaring nation signals a nation's arrival on the world scene - technologically, economically, and militarily - in a way that few other things can. Put simply, entry into the realm of space signals legitimacy. Even 53 years removed from the launch of Sputnik, the allure of space is in no danger of becoming passé. It is little wonder then that rogue nations like Iran and North Korea have also attempted to become spacefaring nations - the former recently meeting with some success.218 In this regard, is there any doubt that these rogue nations, as well as others, might have made greater or earlier gains in space had the U.S. not controlled the export of space technologies so closely for the last 53 years?
The allure of profits can also lead to the development of indigenous space capabilities. This profit motive, in turn, leads one to question the motives of foreign space concerns that disparage the ITAR regime. Are European criticisms about the ITAR pretext for garnering a larger share of the commercial space market through the sale of its ITAR-free products? Is ITAR simply a scapegoat for increased European protectionism? Moreover, are European criticisms about the ITAR pretext for employing inexpensive PRC launch services for those ITAR-free products without giving the appearance of open defiance of the defacto U.S. embargo on those services? These scenarios are not beyond the realm of possibilities - and yet some advocates of ITAR reform appear to take European criticisms at face value without examining the vested interests of those critics. There is no doubt, the more of a pariah U.S. export controls become in the eyes of international customers, the more effective the ITAR-free advertising campaign becomes.219
As indicated in Mr. Chao' s testimony, there are any number of factors contributing to the decline in U.S. market share for satellite sales worldwide. Among these factors are changing markets, foreign purchasers' perceptions about the ITAR, independence from the U.S., the national security concerns of other nations, the national pride associated with becoming a spacefaring nation, and the potential for profit as a result of the development of indigenous space technologies. The common thread with these factors is that all, with the exception of the ITAR, are effectively outside the control of the U.S. Indeed, while the U.S. might be able to exert soft power and influence the decisions or direction of some nations, the ITAR is the only factor that is immediately within the control of the U.S. Therefore, the urge might be to reform it in the hope that doing so turns out to be the proverbial silver bullet. This issue, however, is clearly larger than just U.S. export controls.
C. Points of Contention in the Reform Debate
1. Export Control Reform: Deregulation Wrapped in the Flag
"Virtually all current reform efforts start with the premise that this is a national security issue - versus primarily an economic problem."220 In terms of the balancing of commercial and national security interests described in the Introduction, this singular focus on national security gives one the distinct impression that there is no balancing occurring at all - and, indeed, that there is a thumb on the national security side of the scale. But is this accurate or simply an unchallenged orthodoxy? One recent commentator on the export control reform debate opened his discussion on the topic with the following excerpt from The Prince:
It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage, than the creation of a new system. For the initiator has the enmity of all who would profit by the preservation of the old institutions and merely lukewarm defenders in those who may do well under the new.221
The impression given is that entrenched and/or moneyed interests stand to lose under a reformed export control regime. However, the application of this Machiavellian notion to the export control reform debate misses the mark by fundamentally mischaracterizing the interests of those involved in it. This mischaracterization is arguably a testament to how successfully the narrative associated with the debate has been framed in terms of national security. The enactment of the export control reform initiatives described in Chapter 3 will result in deregulation - i.e. the opening of heretofore closed or otherwise obstructed markets to U.S. manufacturers. U.S. manufactures stand to benefit, not from the preservation of the "old institution," but from the creation of a new one, which has fewer controls over fewer items and services. The advocacy coalition (which includes industry) pushing for reform for the last two decades has successfully wrapped export control reform in the flag by tying reform to the advancement of national security imperatives - i.e. the economic health of the industrial base. The narrative advanced by the advocacy coalition therefore aligns with the end industry seeks to achieve (i.e. deregulation), without ever actually mentioning deregulation. As Bill Reinsch, president of the National Foreign Trade Council, an industry trade organization with the goal of opening markets,222 told The Space Review, "[y]ou can't win an export control reform fight talking about jobs and exports... [f]he only way you can win an export control fight is talking about national security."223 In introducing the President's export control reform initiative, a senior DoD official echoed this sentiment, "by casting [export control reform] appropriately as a national security issue, where change... is important to our national security... rather than this being about increasing exports... I think that the politics are a little bit different."224 Despite the national security-centric rhetoric, industry "is strongly committed to the ideal of free market capitalism, and regards government involvement in space as a constraint to the commercial development of space."225 So while other industries are facing new regulations under the Obama Administration and others are facing additional scrutiny (e.g. oil, mining, health care, finance) the ITARaffected industrial base is in the rather enviable position of having their industry deregulated.226
This is not to suggest that export control reform is simply pretext for deregulation. Rather, it is only to shed light on the fact that reform will inure to the benefit of industry's bottom line. That fact is otherwise hidden in the current debate by the manner in which the debate has been framed. Why is it important to expose the fact that ITAR-affected industry stands to benefit from reform? Because, as described below, much of the evidence cited by proponents of reform is garnered from industry itself. Certainly, one need not be a skeptic to be skeptical of industry responses to questions relating to government regulation and oversight.
2. The Space Industrial Base: Burdened, Opportunistic, or Both?
a. "Arsenalizing" an Industry?
The U.S. space industrial base is supported in large part by U.S. defense and national security budgets.227 As a result, the CSIS argues that, "the national security community 'owns' the U.S. space industrial base, and must either provide for the health of the industry ('arsenal strategy') or encourage it (and enable it) to participate more in the global market place to broaden its economic base."228 This contention raises an array of issues. First, it would appear to present a false choice by making this an "either/or" proposition. Clearly, the industry can be, and in fact is, supported by both the USG and the commercial market (foreign and domestic) simultaneously. That the ratio of government contract to commercial contract revenue is so high is arguably due to the fact the U.S. spends several times more on military space than all other nations combined.229 Second, the contention presupposes that export control reform (i.e. opening markets) will allow U.S. companies greater participation in the global marketplace. Considering the myriad factors affecting foreign buyers decisions discussed above, this is no guarantee. Third, the CSIS study does not posit a guess as to what the appropriate ratio of government contract to commercial contract revenue might be. Indeed, this is the first of several areas in which benchmarking might provide some baseline for determining whether U.S. "ownership" of its space industrial base is unique or whether it is in line with that of other countries. For example, is industry's dependence on national securityrelated USG contracts for 60% of its revenue (95% if civil government contracts are included), in line with the ratio of government contract to commercial contract revenue in other countries? Considering the U.S. is still the competitive leader in commercial space by a wide margin,230 it follows that other countries' forays into space are likely even more heavily subsidized by their respective governments.231 This begs the question, is industry's reliance on USG contracts for revenue such a bad thing? There are two elements to this inquiry.
First, there is the issue of national priorities. The 2010 U.S. National Space Policy indicates that use of outer space is a vital national interest.232 As such, the USG should be prepared to support the space industrial base, irrespective of its ability to compete in the global marketplace. To be sure, U.S. advances in space during the Cold War were not dependant on the opening of global markets to the space industrial base - and yet the U.S. still managed to outpace its rivals. Moreover, despite the continued existence and application of the purportedly anachronistic export controls, the U.S. is still the leader in commercial space competitiveness. So why the continued doomsaying? Here we return to the idea expressed by Senator Heinz in 1991 that the U.S. can "no longer afford the status quo" (i.e. the current export control regime). Regarding the health of the defense industrial and technology base, Senator Heinz offered the following as evidence of the need for reform:
Four recent assessments of the U.S. defense industrial and technology base project a grim picture of the ability of the U.S. economy to support a war effort under current conditions. The Air Force Association concluded that the U.S. and its allies were not prepared to sustain a conventional war much beyond thirty days and that the U.S. industry today could not meet wartime mobilization requirements in less than eighteen months.233
As borne out by history, these assessments had all the prescience of Neville Chamberlain's "peace for our time" pronouncement in advance of Hitler's 1939 invasion of Poland.234 Indeed, on 17 January 1991 (the same year Senator Heinz' book was published), the U.S. and its allies commenced OPERATION DESERT STORM in response to Iraq's invasion of Kuwait. The U.S. has been involved in sustained military and peacekeeping operations in the Middle East and elsewhere ever since (i.e. nearly 20 years). While a number of the policies and strategies employed in those successive military operations have been called into question, there is no disputing the military superiority displayed by the U.S. in the prosecution of those operations. The grim picture painted by the various assessments cited by Senator Heinz have not only been proved false by history, but also reflect the tendency in Western thought to portend the worst. As Thomas B. Macaulay, a British poet, historian and politician of the mid- 1800s wrote, "[w]e cannot absolutely prove that those are in error who tell us that society has reached a turning point, that we have seen our best days. But so said all who came before us, and with just as much apparent reason."235 So, when the NRC in Beyond "Fortress America" now claims that "[o]ver time, the harm to the U.S. military capability caused by export controls has expanded and has now reached substantial proportions,"236 that claim must be viewed in light of the similar doomsaying assessments that came before it. While the claim cannot be absolutely disproven, neither should it be viewed as the final word on the matter.
Second, the 2008 CSIS Study ties innovation to the revenue increases that will purportedly result in the opening of foreign commercial markets.237 In this regard, the "arsenalization" argument is internally inconsistent with other claims made within the Study. For example, the Study highlights the PRCs strides in space over the last decade, to include: the fielding of an indigenous navigation system (Beidou); the launch of a three meter resolution imaging satellite; manned spaceflight; the successful test of an anti-satellite (ASAT) weapons system; the sale of a Chinese-built satellite to a foreign buyer; and the launch of its first lunar probe.238 These strides were made despite the fact that the PRC is a relatively minor player in commercial space. For example, between 2005-2009, two Chinese-built commercial satellites were launched.239 During that same time period, seventy-three U.S. -built commercial satellites were launched.240 All of this to say that China has managed to innovate without being a major player in commercial space (i.e. China's space program is effectively "arsenalized"241). Why then is the future so bleak for U.S. innovation despite the fact that, in the commercial satellite sector, it outpaced the PRC by 3,650 percent over the past five years? Put differently, how much better does the U.S. have to be in the commercial realm in order to outpace its rivals - to say nothing of its prodigious defense and national security spending? None of the assessments reviewed for this article posit an answer to this question.
This analysis highlights that where the evidence supporting a claim is difficult to attain and equally difficult to assess, the analysis and conclusions resulting therefrom should be viewed with some skepticism. Indeed, this is the epitome of the aforementioned metaphorical threedimensional geopolitical chess match in which your moves, as well as your opponents, must be divined through a crystal ball. The "best guess"242 aspect of such assessments does not obviate the need for such assessments to be made, it simply means that policy makers should view the assessments in light of the quality of the evidence underlying the assessments. To that end, we now turn to an analysis of the evidence in the current export control reform debate.
b. Where's the Beef? Examining the "Evidence" in the Reform Debate
(1) The DoD 's Defense Industrial Base Assessment
I have been in this business for 23 years and can speak from first-hand experience - ITAR is not at the root of any levels of competition in our industry, especially for launchers and spacecraft... I would state that in only a small percentage of cases ITAR has had any significant impact on the numbers of spacecraft units or revenue figures. ITAR just does not have a significant impact... I don't see that compliance is bad at all. At Sea Launch we have learned to work with ITAR as we operate in so many cultures and foreign nations. We all work together in a seamless manner.243
-Rob Peckam, Former President and General Manager of Sea Launch
This account - a rare non-condemnation of the ITAR - stands in contrast to the claims of industry with regard to the adverse effects of the ITAR on the international sales of space technologies. Or does it? Indeed, in the DoD' s Defense Industrial Base Assessment export controls were cited by those surveyed as the number one barrier to foreign markets.244 These survey results were, in turn, cited in the 2008 CSIS Study245 and then offered to the Congress as evidence of the need for reform.246 However, as pointed out above, the DoD' s Defense Industrial Base Assessment offers intuitive, non-statistical evidence. While it is indeed intuitive that the companies surveyed would not be keen on goverrrnjájt ;,pegal$tQn and oversight, without statistically sound evidence, the findings are just that: intuitive. This is true as well of the other findings in the DoD 's Defense Industrial Base Assessment - including the purported $50 million in ITAR compliance costs and $600 million lost revenue figures, as well as the overall financial health of 2nd and 3rd tier companies.247 Why is this important? In all of discourse reviewed for this article - to include the congressional record - the DoD's Defense Industrial Base Assessment is the only current study cited which ostensibly seeks to gauge the health of the U.S. space industrial base. As the health of the U.S. space industrial base is cited by two of the leading studies on export control reform (i.e. the 2008 CSIS Study and the NRCs Beyond "Fortress America") as evidence of the need to move the current regime toward one that is more profitable for industry, the veracity of the data underlying the DoD's Defense Industrial Base Assessment is critically important. This begs the question: why is intuitive, non-statistic evidence deemed sufficient for purposes of 'th^^tate^Jf between 1997 and 2007 U.S. market share in the world satellite niânufacturing market dropped from 65.1 percent to 41.4 percent, the "why" question associated with that drop appears important enough to prompt something more than a non-statistical survey of industry.248 The answer may lie in the aforementioned caveat offered in the National Academy's 1987 book, Balancing the National Interest: U.S. National Security Export Controls and Global Economic Competition, namely: "...we determined that reliable quantitative data regarding the effectiveness of controls - and the impact of controls on economic development and trade - continue to be very difficult to obtain."249 There are no indications this caveat is less true today than it was in 1987. The primary difference appears to be that today no such caveats are being offered in connection with the data presented.
(2) Unanswered Questions, Untapped Resources
What is particularly curious about the current reform debate is that the assessments advocating for reform appear to have garnered little or no empirical data from the DDTC (specifically the Space and Missile Technologies Division of the DDTC), the organization in charge of licensing decisions for virtually every U.S. transaction involving a space technology and a foreign entity. Presumably, information garnered from the Space and Missile Technologies Division could inform the debate in a number of areas, as the following eleven questions demonstrate:
(1) What is the average processing time for license applications processed by the Space and Missile Technologies Division?
(2) What percentage of applications processed by the Space and Missile Technologies division are referred out to other agencies (e.g. DoD, NSA) before an authorization decision is made?
(3) What is the average processing time for license applications that are referred out to other agencies for review?
This information could inform the debate on the procedural efficiency of the DDTC with regard to space technologies. One major criticism of the ITAR is that U.S. competitors, "are not subject to the cumbersome multi-agency review process and conditions of approval the U.S. exporters are," theirs is "kind of a one-stop shop."250 One satellite industry spokesperson claims that as a result,
U.S. export policy has joined price, quality and technical capabilities as a factor when customers consider buying U.S.-made satellites. Whether for real or perceived reasons, many prospective international satellite customers maintain the belief that U.S. export controls are unpredictable, excessively stringent and time consuming.251
The marketplace for space technologies is highly competitive. To be sure, "[t]he world market for satellites and satellite-related components is a tight and highly contested marketplace. In each of the past two years, just 21 satellites were ordered, with prices ranging from $200-500 million, depending on their technical complexity."252 In a competitive international marketplace, these regulatory hurdles can drive buyers to foreign suppliers whose export control regimes are perceived to be less onerous - ^particularly when there is parity or near parity in price and quality of the technologies.
Currently, the DDTC makes available on its website the average processing times for all applications it receives, but does not provide breakouts for particular DDTC divisions or for applications that are referred out to other agencies for review.253 This information could be used as a benchmark for comparison to the export control regimes of U.S competitors. Currently no benchmarking in this area has been accomplished. Instead, anecdotal evidence, like the "one stop shop" example offered above, is employed against the ITAR regime. What if the "one stop shop" of the U.S. competitor actually takes longer to process export license applications than the U.S.? Simply by virtue of being a "one stop shop" does not mean that it is necessarily more efficient. In any event, a comprehensive quantitative comparative study of the export control regimes of U.S. competitors could potentially accomplish two things: (1) if the export control regime of competitors are in fact more efficient than the export control regime of the U.S., the processing times of those countries could be used as a aspirational benchmark for the DDTC - i.e. the DDTC could set a goal to match or beat the processing times of competitor nations, while still ensuring the national security standards of the AECA are met; and (2) if the export control regimes of competitors are not more efficient than the export control regime of the U.S., that fact could be advertised as a rebuttal to the notion that the U.S. export control regime is fraught will delay. As yet, no such study has been conducted.
(4) How many license applications per year does the Space and Missile Technologies Division of the DDTC process?
(5) Are these application numbers increasing, decreasing, or flat?
Again, the DDTC makes available on its website the total number of license applications processed per year, but does not provide breakouts for particular DDTC divisions. All else being equal, one would assume that if the ITAR is truly affecting the ability of U.S. companies to compete in the global marketplace - "imposing excessive burdens for businesses and therefore imped[ing] the flow of legitimate trade and technology transfers"254 - license applications would be decreasing. While the overall number of licenses applications processed by the DDTC increased from 70,000 in 2006 to 84,000 in 2008, that fact cannot necessarily be imputed to the Space and Missile Technologies Division.255
(6) Of the license applications processed by the Space and Missile Technologies Division annually, what percentage are denied on substantive grounds?
(7) What percentage of license applications processed by the Space and Missile Technologies Division annually are for the export of space technologies to NATO and major non-NATO allies?
The importance of the answer to these questions for purposes of the export control reform debate cannot be understated. In 2006 for example, the DDTC license denial rate was around one percent.256 During that same time period, it was reported that the denial rate for exports to the U.K. was just .01%.257 If denial rates are this low for licenses relating to space technologies, then the debate is not about the USG denying U.S. manufacturers the ability to export or temporarily import those technologies, but rather the regulatory processes and procedures under which those technologies are exported.258 In this respect, the efficiency of those processes and procedures - particularly as compared to U.S. competitors - is of paramount importance. However, without any benchmarking how can one say how much improvement in this area is needed, if any?
(8) What percentage of license applications processed by the Space and Missile Technologies Division annually are submitted by non-prime contractors? (i.e. tier-2 subcontractors and tier-3 commodity suppliers)
(9) Have the percentages of license applications for tier-2 subcontractors and tier-3 commodity suppliers increased, decreased or remained flat over the years?
Similar to the questions relating to the overall number of license applications processed by the Space and Missile Technologies Division, these questions go to the health of tier-2 and tier-3 companies. Currently, the health of these companies is being gleaned from the DoD's Defense Industrial Base Assessment and repeated in the 2008 CSIS Study.259 If the tier-2 and tier-3 companies are in fact being adversely affected by the ITAR, as claimed by the CSIS, then one would presume license applications from these companies would be decreasing.
(10) Of the license applications the Space and Missile Technologies Division processes, what percentage is for hardware and what percentage is for defense services?
(11) What are the respective dollar values of the hardware exported and services provided?
These are examples of questions that could either confirm or rebut the DoD's Defense Industrial Base Assessment. Indeed, based on the industry survey, the DoD determined that for the years 2003-2006 defense services represented 76% of foreign sales and that hardware (spacecraft and components) accounted for 13% of foreign sales.260 In this instance and others, there is no need to rely on an industry survey to garner this information, as it should be readily available from the DDTC. That no one has tapped the DDTC wellspring is surprising, to say the least.261
The desire for empirical evidence should not be carried to the extreme or preclude smaller-scale reform initiatives. For example, if the DDTCs processes and procedures were such that industry's ability to operate in the global marketplace was obviously and needlessly impaired, then the need for empirical evidence on the health of the space industrial base would be less critical. Inefficiencies in the DDTCs processes and procedures likely came close to crossing this threshold just four years ago.262 To be sure, Deputy Assistant Secretary Kovac indicated to the House Subcommittee on Terrorism; Nonproliferation and Trade in December 2009 that,
Several years ago, and not without justification, the [DDTC] had a less than stellar reputation for its processing of license applications. In Calendar Year 2006, the [DDTC] processed 70,000 license applications with an average processing time of 43 calendar days. This does not tell the whole story, however. At one point in September 2006, the [DDTC] had over ten thousand license applications open and awaiting final action. Also during that year, over fifteen thousand applications took over 60 days to be resolved.263
Since 2006, the DDTC has significantly improved its metrics.264 Indeed, the DDTC processed 84,000 license applications in 2008, with an average processing time of 16 calendar days.265 However, this initial two-week licensure process does not tell the entire story. Depending on the value and sensitivity of the item, technical data or defense service to be exported, authorization tof export Aitóy * require a multi-agency review of the application, including, inter alia, review by the DoD and the National Security Agency (NSA); congressional certification;266 an approved technical assistance agreement for the provision of defense services or technical data;267 an approved technology transfer control plan and encryption technology control plan for the transfer of space technologies to countries other than NATO allies or major non-NATO allies.268 Licensing in these more complex cases takes longer than 16 calendar days. In 2008, for example, the DDTC processed 1,100 applications that took more than 60 days to resolve.269 Even so, these 1,100 applications accounted for just over 1 percent of the total number of applications processed in 2008. It follows that 99 percent of license applications are processed within 60 days.
This begs the question: are the administrative hurdles associated with obtaining a DDTC license to export really that onerous under the ITAR? In other words, how much process is too much process? This would appear to be a question with no one answer, but again some benchmarking with U.S. competitors would at least provide a reference point to begin the discussion. For the sake of argument, if one accepts that the administrative hurdles are sufficiently onerous as to necessitate reform, would the reforms suggested in the current debate make these hurdles discernibly less onerous? It is here that one of the great ironies of the debate is exposed - where rhetoric meets reality. For example, if COMSATs and related equipment are removed from the ITAR's USML and returned to the EAR's CCL, the BIS would be responsible for processing export licenses. In Fiscal Year 2008, the BIS took an average of 27 days to process export license applications - 11 days longer than the DDTC in calendar year 2008.270 There is no indication of how long the BIS took to process complex applications, which would undoubtedly include those relating to satellites.271 For this reason, John Ordway, a U.S. attorney specializing in export licensing, has said that a move from the ITAR to the EAR would simply not make much of a difference for companies seeking licenses.272 The biggest difference the move would make, in Mr. Ordway' s opinion, "might be in the culture in the Commerce licensing office which... would be more willing to be advocates for the companies than the current system."273 The obvious risk here is that advocating for compames and protecting national security are not necessarily well matched, as evidence by Hughes' interactions with the DoC in the 1990s. Even before the Hughes' debacle, Senator Heinz described these as "mutually incompatible missions within the principle agencies responsible for carrying out export control policies rendering them unable to balance - much less manage - the natural tension between national and economic security interests."274 He further indicated that, "[f]he Department of Commerce is commercially unable to balance trade promotion and trade controls."275 Putting that argument aside, if there is near parity in processing metrics between the DDTC and the BIS, then it cannot be said that moving COMSATs from the USML to the CCL would make the regulatory hurdles associated with obtaining a license discernibly less onerous.
3. Overstatements in the Export Control Reform Debate
a. One Size Fits All
An additional complaint about the ITAR centers on the fact that allies and non-allies are similarly treated, thereby creating a world of "many sticks and few carrots."276 The implication is that the ITAR is a "one size fits all" regulatory regime that fails to treat allies as allies should be treated.277 In other words, the U.S. should offer its allies more carrots. As indicated above, dissimilarities in the export control regimes of the U.S. and its allies can lead to the reexport or diversion of ITAR-controlled technologies. In this regard, and with the exception of Canada, allies and non-allies are treated similarly in that DDTC licenses prohibiting the reexport or diversion must be obtained prior to the export or temporary import of ITAR-controlled technologies.278 This is necessary to achieve the nonproliferation policy aims of the AECA and the STNDAA for FY 1999.219 Beyond this reality, there is an additional aspect of the "one size fits all" argument that bears further examination. Even a cursory reading of the ITAR reveals the extent to which allies of the U.S. are advantaged above non-allies in the ITAR licensing process, both in terms of licensing metrics and otherwise.280 Indeed, among the advantages is a "blanket exception" the ITAR affords for COMSAT exports to NATO and major non-NATO allies.281 As should be clear by this point, COMSATs are a major driver of the export control reform debate. Even so, the discourse reviewed for this article - to include the congressional record - does not reveal the extent to which U.S. COMSAT manufacturers are taking advantage of this "blanket exception" or the extent to which it affects the licensing process overall. In fact, this exception is never mentioned. Taking just this one example, how can it be said that the export control regime is a world of "many sticks and few carrots" if it has not been determined the extent to which the existing carrots are being utilized? Arguably, this type of overstatement is a rhetorically effective means of promoting a reform agenda, but that does not necessarily make it true.
b. American Exceptionalism?
Representative Brad Sherman, the aforementioned Chairman of the House Subcommittee of Terrorism, Nonproliferation and Trade recently opened a hearing on the topic of export controls for satellite technology by saying, "we are the only country that controls satellite exports as if they were armaments."282 This is a rhetorically powerful claim. It connotes that the U.S. approach to satellite exports is sui generis - and presumably out-oftouch with the way the rest of the world is operating. Ellen Tauscher, who is now Undersecretary of State for Arms Control and International Security, similarly indicated, "[u]nlike other nations, the US controls commercial satellites as defense articles."283 As mentioned above, the DDTC is currently in Undersecretary Tauscher's charge. Despite their bona fides in the realm of export controls, both Representative Sherman and Undersecretary Tauscher have advanced a notion that is demonstrably false - that is, the notion that the U.S. is the only nation that controls satellite (qualified as "commercial satellites" in Undersecretary Tauscher's case) exports as munitions.284 First, it bears mentioning that since the DDTC appears to deny only around one percent of the license applications it receives, regulating commercial satellites and related technologies as munitions as opposed to commodities is, in reality, a distinction without a difference. While the process for obtaining the license may be different, the result is the same - i.e. approval.285 Putting that fact aside, the French, for example, control commercial remote sensing satellites as munitions.286 Remote sensing satellites constituted 8 percent of the total worldwide commercial payloads launched between 2005-2009.287 While COMSATs have been the proverbial cash cow in the commercial space sector since its inception, "[fjhere is a significant increase of commercial interest in Earth Observation..."288 To the extent that U.S. companies are disadvantaged by the "munitions yoke" being placed around remote sensing satellites, so too are the French (Thaïes Alenia is based in France). Notably, U.S. manufacturers built 4 of the 12 commercial remote sensing satellites launched between 2005-2009; French manufacturers built none.289 The European Community Regulation governing the export of dual-use goods allows the export of space-qualified remote sensing technologies to certain thresholds, above which the technologies are considered munitions.290 Again, to the extent that U.S. companies are disadvantaged by the "munitions yoke," so too are European companies for remote sensing technologies exceeding certain thresholds (EADS Astrium is based in the Netherlands).
The effect of overstatements such as these - whether relating to the treatment of allies under the ITAR regime or the notion that the ITAR is singularly unique in its treatment of commercial satellite technologies - is that the U.S. export control regime appears more dysfunctional than it actually is. As a result, these statements arguably do a disservice to the reform debate by further obfuscating an already complex set of issues.
III. "WHEREOF WHAT'S PAST IS PROLOGUE, WHAT TO COME, IN YOURS AND MY DISCHARGE"291: THE FUTURE OF THE U.S. COMMERCIAL SATELLITE EXPORT CONTROL REGIME
Having examined the export control reform debate, we now turn to an examination of current reform efforts - both regulatory and legislative. It should be noted that this is a fertile and evolving field with concurrent reform efforts afoot in both the Executive branch and the Congress. What legislation the Congress will pass, if any, is unknown. Similarly, while the Obama Administration will undoubtedly promulgate regulatory changes to the ITAR, the fundamental reform it seeks may not be fully realized if the Congress does not make the necessary statutory changes to the current export control regime.
A. Pending Reform Legislation Before The Senate
H.R. 2410, Foreign Relations Authorization Act, Fiscal Years 2010 and 2011 appears to have a very good chance at becoming law.292 Moreover, if H.R. 2410 passed in its current form, it would arguably constitute the most significant reform of the U.S. strategic export control regime since the STNDAA for FY 1999. It passed the House by a vote of 235 ayes, to 187 nays on 10 June 2009. With its passage, the House indicated that, "[i]n a time of international terrorist threats and dynamic global economic and security environment, United States policy with regard to export controls is in urgent need of a comprehensive review in order to ensure such controls are protecting the national security and foreign policy interests of the United States."293 The bill is currently with the Senate Committee on Foreign Relations; the Senate is expected to pass a version of the bill in the summer of 2010; a reconciled bill is likely to be completed by September 20 10.294 This section will detail the major export control reforms contained in Title VIII of H.R. 2410, Export Control Reform and Security Assistance, namely: (1) improving license processing metrics; (2) ensuring adequate staffing for license offices; (3) periodic review of the USML; (4) transparency in the DDTC licensing process; and (5) granting the President the authority to remove commercial satellites from the USML.
1. Improving License Processing Metrics
HR. 2410 codifies NSPD 56, which set the processing metric for export licenses at 60 days.295 The legislation requires that 93 percent of applications annually are processed within that metric; a 60-day metric also applies to commodity jurisdiction applications.296 The legislation requires the DoS to brief the appropriate congressional committees when the established metrics are not being met.297 The legislation also establishes a processing goal of 7 days when the item to be exported is to go to U.S. allies in direct support of combat operations; a 30-day processing goal is established for NATO allies and major non-NATO allies, irrespective of involvement in coalition combat operations.298 Interestingly, HR. 2410 also requires the DDTC to submit to the Congress, on 31 December 201 1 and 31 December 2012, several of the quantitative metrics discussed in the last Chapter, to include, inter alia: (Y) the average license processing time and the number of applications for NATO and major non-NATO allies, Australia, New Zealand, Japan, South Korea, Israel, as well as "all other countries"; and (2) the average processing time and number of applications by USML category.299 The latter would necessarily include a breakout for USML category XV space technologies. In this regard, it would appear the Congress is also interested in getting beyond the anecdotes currently driving the export control reform debate and is instead interested in hard quantitative data.
2. Ensuring Adequate Staffing for the DDTC
It is said that the DDTC is a chronically understaffed organization.300 A review of the DDTC website reveals there are currently 44 licensing officers on staff and 6 licensing division chiefs.301 Between March 2009 and March 2010, the DDTC processed approximately 82,000 export license applications.302 If the 6 division chiefs and 44 licensing officers reviewed an equal share of license applications, each reviewed approximately 1,640 applications in the last year; if just the 44 licensing officers reviewed an equal share of license applications, each reviewed approximately 1,860 applications in the last year. To put those numbers into perspective, each licensing officer at the DDTCs DoC counterpart, the BIS, reviewed approximately 400 applications in 2007.303 HR. 2410 establishes a requirement that the DDTC staffai least 1 licensing officer for every 1,250 license applications it expects to receive per fiscal year.304 For the March 2009 to March 2010 timeframe, that would have imposed a requirement that the DDTC staff 65 licensing officers - a 33 percent increase over the 44 licensing officers currently on staff.
3. Periodic Review of the USML
The AECA indicates, "[t]he President shall periodically review the items on the [USML] to determine what items, if any, no longer warrant export controls under this section."305 What the AECA does not establish is any timeframe for this periodic review. HR. 2410 addresses this issue by requiring the Secretary of State to review 20 percent or more of the technologies and goods falling under the USML for each of the next five years; at the end of the five years, the entire list will have been subject to review. The proviso also requires the Secretary of State to submit an annual report to Congress indicating the results of the required review.307
4. Transparency in the DDTC Licensing Process
Here, HR. 2410 amends the AECA by addition, indicating "the President shall make available to persons who have pending license applications under this chapter and the committees of jurisdiction the ability to access electronically current information on the status of each license application required by this chapter."308 This information includes: a case number; the date of receipt for the application; the DDTC disposition date; the interagency review completion date, if applicable; the initial date of congressional consultation concerning the application, if applicable; and the date the license application is sent to the congressional committee of jurisdiction, if applicable.309 This electronic access requirement comes into force one year after the enactment of the legislation.310
5. Granting the President Authority to Remove Commercial Satellites from the USML
H.R. 2410 authorizes the President to remove satellites and related components from the USML.311 The proviso includes a blanket exception with regard to the PRC. The authority granted the President "may not be exercised with respect to any satellite of related component that may, directly or indirectly, be transferred to, or launched into outer space by the People's Republic of China."312 In practice, this would mean that COMSATs and related components bound for China, either for launch or otherwise, would remain on the USML, while COMSATs and related components bound elsewhere could be transferred to the CCL. This exception arguably represents a political compromise and increases the likelihood of the proviso becoming law. Indeed, at a conference in November 2009, an export specialist for the Senate Foreign Relations Committee indicated, "[i]n the political environment we operate in, China is the third rail...[w]e have members who know China tests weapons in space, and they don't want to be accused of giving them any assistance."313 Moreover, the exception squarely addresses the unauthorized disclosures made by Hughes and Loral that occurred in the 1990s and were the subject of The Cox Report.
These proposed legislative reforms will arguably improve the current export control regime. The proposed reforms include both procedural aspects (e.g. metrics, staffing, and process transparency) and substantive aspects (e.g. review of the USML and authority to remove commercial satellites from the USML). The most important and difficult of these reforms is the review of the USML. Distinguishing the crown jewels from the costume jewelry is no easy feat, but the resultant list should provide the cornerstone for a more efficient and effective export control regime. The only question is why the DoS has been given five years to review and update the USML pursuant to the proposed legislation, given the sense of urgency nearly all parties to the reform debate are currently expressing.
B. The President's Export Control Reform Agenda
On 13 August 2009, President Obama ordered a "sweeping interagency review" of U.S. strategic export controls. The review was conducted by an interagency taskforce which included all USG departments and agencies with a hand in the current export control regime.3 On 21 December 2009, President Obama signed Presidential Study Directive 8 (PSD-8), ordering officials within his Administration to recommend the statutory and regulatory steps necessary to overhaul the current export control regime - to include those controlling COMSATs and other commercial satellites - based on the findings of the "sweeping interagency review."315 The review, which has not been made public,316 concluded, "the current U.S. export control system does not sufficiently reduce national security risk based on the fact that its structure is overly complicated, contains too many redundancies, and tries to protect too much."317 The PSD-8 officials therefore recommended the regime undergo fundamental reform, to include the creation of: (1) a single control list; (2) a single primary enforcement agency; (3) a single information technology (IT) system; and (4) a single licensing agency.318 Implementation of this reform agenda will reportedly come in three phases. The first phase includes regulatory reforms to the current system and preparing the legislative proposals necessary to bring the full reform agenda to fruition; the second phase includes further regulatory reforms, to include removal of some items from the USML, as well as increased funding for the future enforcement and IT initiatives to come; phase three includes the passage of legislation required to implement the full reform agenda.319 Defense Secretary Gates indicated an ambitious timeframe for implementing this reform agenda, to include the passage of necessary legislation, saying all could occur before the end of 2010.320 While details concerning the Administration's inchoate reform initiative are still somewhat sketchy, enough information has been released to engage in an analysis of the initiative, albeit somewhat perfunctorily.
It should be noted that these proposals - namely the creation of a single licensing agency and a single export control list - break no new ground. Indeed, Senator Heinz recommended these exact reforms in his 1991 book and also introduced legislation to those ends.321 He did so, "to confront head-on the interagency difficulties that have crippled the development of coherent policy over the years," with an emphasis "on the wider idea of economic security."322 The fact that the arguments for export reform have not changed in decades (although "economic security" is now being framed in terms of "national security") and the proposals to "fix" the problem have not changed in decades, does not necessarily mean that those arguments and proposals are fallacious. However, it again calls into question the notion that, "[t]his country can no longer afford the status quo."32i In the intervening decades since Senator Heinz first made that claim, the sky has not fallen - the U.S. remains the clear leader in commercial space.324 Absent evidence to the contrary, there is little reason to believe that will not also be true 20 years hence.
1. The Four Singles
The President's reform initiative calls for the creation of an entirely new bureaucracy to control the export of munitions, dual-use technologies, and commodities. At the heart of this new bureaucracy are what have been dubbed the four singles: "a single export control list, a single licensing agency, a single agency to coordinate enforcement, and a single unified IT system."325 This consolidation would merge the USML and the CCL; merge the regulatory functions currently being carried out separately by the DDTC and the BIS; merge the separate IT systems currently being employed by the DDTC and the BIS (i.e. creating a single point of entry for exporters); and merge the enforcement functions currently being carried out separately but the DDTC and the BIS. A senior defense official providing background on the initiative indicated that the purpose of this consolidation is "to make clear to companies that they have a single place to go, in terms of understanding what restrictions may be, and frankly to avoid situations where people may attempt to either forum shop, by trying to use one list versus the other, or cases where they get captured by two lists and have to go... through more than one export control process."326 While this consolidation might represent a significant change for exporters of some technologies, it would not appear to significantly affect exporters or temporary importers of space-related technologies. As indicated above, the language of Category XV of the USML is sufficiently broad so as to capture virtually all space-related technologies.327 As a result, the DDTC is already a "one-stop-shop" for exporters and temporary importers of space technologies. Confusion as to restrictions, forum shopping, and duplicative processes are simply not an issue with regard to space technologies. It would appear, therefore, this is another instance in which the space sector is being conflated with the non-space sector within the larger reform debate. That said, consolidation could improve the efficiency of the current licensing process if it obviated the need for multi-agency review of license applications. For example, if the new single licensing agency included elements from the DoD and NSA, among others, then the national security reviews of these various constituent groups could all be conducted "inhouse." It follows that "in-house" reviews might be more efficient than the multi-agency staffing occurring under the current export control regime.
What is not known at this time is whether the single licensing agency would fall under a current department (i.e. DoS, DoC, or DoD) or whether an entirely new agency would be created. A senior defense official providing background on the initiative indicated that, "none of the national security agencies involved in this have been ruled out."328 This statement would appear to indicate that the DoC is not a potential candidate for overseeing the new agency. It follows too that the DoC would not be the appropriate department to oversee sensitive military technologies - which the new single agency would necessarily oversee. If the DoC is cut out of this process, then the Senate Banking Committee will lose oversight jurisdiction over export controls. If the Administration determines the DoD is the appropriate department to house the new single agency, then each of the Senate and House committees of jurisdiction currently responsible for the oversight of export controls would likely cede jurisdiction to the respective Armed Services committees in the Senate and House. Any such legislation necessary to create the new single licensing agency under the DoD would originate in, pass through, or potentially stall in one or more of these current committees of jurisdiction. As a result, the parochial interests of these committees, which might well lose that jurisdiction under the President's reform initiative, cannot be underestimated. Within this debate, power politics are a factor.
The single list created under the President's reform initiative is to be tiered based on the importance of the technology to be exported or temporarily imported. A relatively small number of "crown jewels" would be placed in the top tier and subject to the tightest controls; other technologies would be tiered and subject to controls based on their relative importance to national security; items such as "lug nuts, screws, bolts... those simple tools" would be deregulated (i.e. could be exported or temporarily imported license-free).329 Presumably, this would also include items like Bigelow Aerospace's satellite stand. Yet this begs the question: if the export or temporary import of space technologies - with the exception of the nuts, bolts, and screws holding these technologies together - are still subject to a licensing process under the President's initiative, would it make the U.S. industrial technology base more competitive in the global marketplace? Is the ability to sell bolts license-free going to save the industrial base? Would reducing license application processing times from 16 days to some shorter period solve the purported problem? Or could it be that doing away with the ITAR, with all of its baggage (real or perceived) and decades of negative treatment, is sufficient in and of itself to make U.S. manufacturers more competitive globally - irrespective of increased efficiency?
2. Phases of Implementation
Implementation of the President's reform initiative is to come in three phases. Phase one is primarily preparatory in nature and includes, inter alia: formulating the tiers for the single control list; "determining the enterprise-wide needs" of a single IT infrastructure; and laying the groundwork for the establishment of a single enforcement agency.330 Phase two would begin to implement some of the preparatory efforts undertaken in phase one, to include, inter alia: incorporating tiers within the current lists (i.e. USML and CCL) to ease the transition once a single list is created; standing up the single IT infrastructure; and providing notice to the Congress for those items the President intends to transfer from the USML to the CCL in advance of the merger of the two lists.331 Phase 3 of the President's reform initiative would require the Congress to pass the legislation necessary to bring to fruition the four singles.332 If enacted, the legislation would replace the AECA and the EAA. For his part, Representative Berman released a statement in response to Defense Secretary Gates' announcement of the President's export control reform initiative, indicating, "Secretary Gates... set forth his own vision of how the two export control systems might be fully merged. Should the President propose such a step later this year, I will carefully consider it."333 Representative Berman's choice of language is interesting. The notion that this is Defense Secretary Gates' "own vision" rather than the President's vision or the result of interagency consensus, could be read to mean that all of the stakeholders in the debate are not in total agreement on these issues. According to a senior defense official, Defense Secretary Gates is, "the leading champion of export-control reform as a national security issue."334 It is possible, therefore, that the President allowed Defense Secretary Gates to pursue the reform initiative without it actually representing the views of the entire Administration. The likelihood of passing all or part of the legislation required to bring the initiative to fruition would likely be diminished if it does not have the full weight of the Administration behind it.
It is impossible to say whether the new bureaucracy created under the Administration's reform initiative would constitute an improvement over the existing bureaucracy. Here, the first sentence of the above quoted Machiavellian admonition would appear to ring true, to wit: "[i]t must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage, than the creation of a new system."335 The question is - are the problems with the current system such that the risks associated with creating a new system are worth taking? In order to justify those risks, policy makers should demand, at a minimum: (1) a clear identification and articulation of problems within the current system; (2) empirical evidence - or at the very least something more than anecdotal evidence - relating to those problems; (3) a clear indication that reforming the existing system would not alleviate those problems; and (4) a clear indication that the new system would alleviate those problems. As argued throughout this article, these issues have not been sufficiently addressed. It follows, therefore, that the risks associated with creating an entirely new export control regime are not justifiable.
The current U.S. strategic export control reform debate arguably represents an amalgam of enduring paradigms, doomsaying, message marketing, overstatements, absurdities, and anecdotes - all coupled with seemingly legitimate criticisms. On the horizon, some see only giants. Few, if any, see only windmills. In reality, there is insufficient empirical data to make an accurate determination on the ratio of giants to windmills. As a result, and just as the GAO warned with regard to President Clinton's major export control initiative, "[wjithout a clear and common understanding of perceived versus real problems and their underlying causes and without an appropriate analytical framework to tie changes to desired goals, it will be difficult to anticipate the outcomes of changes and to determine whether progress is being made."336 Based on publicly available data, there is no clear and common understanding of real versus perceived problems and their underlying causes; there is not an appropriate analytical framework for tying changes to desired goals. It is possible the interagency taskforce that conducted the "sweeping interagency review" ordered by the President on 13 August 2009 indentified the real problems, as well as their underlying causes; it is possible an analytical framework was created for tying changes to desired goals. If so, that information has yet to be made available. As a result, the public (to the extent that it is interested or is even aware of the issue) is left to wonder whether the Administration's proposals offer just the type of solution H.L. Menken warned against - neat, plausible, and wrong. For example, how will the single licensing agency created under the Administration's initiative reconcile the counterposing national security and economic interests implicated when export decisions are actually made? While proponents of export control reform have effectively merged these two interests into one for purposes of the debate (i.e. tying the economic health of the space industrial base to national security prerogatives), the two interests nonetheless persist as distinct and often competing interests. Will the new agency champion national security or the economic interests of the space industrial base? If it intends to do both, how will it succeed in balancing these interests where the DoC failed to do so?337 This is an open question. The fact that the "stars have aligned" and all of the stakeholders in the reform debate are ITAR critics, does not justify rash action - particularly when less ambitious reforms may achieve the desired end with less accompanying risk.
To that end, the lack of empirical data should not forestall incremental reforms to the present export control regime when such reforms are warranted. For example, if the DDTC license processing procedure slows to the point that it needlessly or arbitrarily hampers the ability of U.S. manufacturers to compete in the global marketplace, that should be remedied. At present, the DDTC metrics for license processing appear to be outpacing the metrics at the BIS (an average of 16 days versus an average of 27 days), despite the fact that the DDTC processes more license applications.338 Even so, the Congress appears poised to foster increased efficiency in H.R. 2410, by increasing the number of DDTC licensing officers and codifying lower license processing metrics. The insularity of this debate is evident from the fact that there appears to be no benchmarking with U.S. competitors in terms of the administrative or regulatory processes associated with foreign space technology exports. In that regard, how can it be said that 16, 26, or even 60 days is an inordinate amount of time to process export license applications and therefore detrimental to U.S. manufacturers, if it is not known how quickly the competition can accomplish the same? For the sake of argument, what if foreign competitors do accomplish these tasks more quickly than the U.S.? Arguably, if the dictates of U.S. national security require a statutory and regulatory regime that is in fact more onerous than those of its competitors, then the answer is not necessarily to tear down that regime. To be sure, U.S. industry is arguably disadvantaged when competing with countries that have no labor or occupational safety laws, but the U.S. response to that competitive disadvantage is not to put children to work, do away with the minimum wage, or eschew workplace safety. There are simply certain "costs of doing business" in the U.S. - to include certain constraints on the ability of private companies to export munitions and dual-use technologies therefrom. Given the tendency of private companies to subjugate higher-level interests in favor of their own short-term profits, these constraints do not appear unreasonable. Indeed, the actions of Hughes and Loral in the 1990s fully support this notion. Moreover, the GAO has indicated that, "while exporters and foreign governments have complained about processing time, reviews of arms export license applications require time to deliberate and ensure that license decisions are appropriate."339
Another area in which a dearth of empirical data should not preclude incremental reforms to the current export control regime relates to the makeup of the USML. To be sure, reform of the USML will arguably solve the vast majority of complaints about the ITAR. A nimble and narrowly tailored USML should reflect the fact that certain commercial space technologies are widely available on foreign markets, while at the same time continuing to protect those technologies in which the U.S. maintains an advantage. This would not only allow DDTC licensing officers to spend more time concentrating on the crown jewels, but also afford U.S. manufacturers of costume jewelry technologies a reprieve from superfluous administrative processes. As indicated above, a reformed USML must clearly indicate to exporters and temporary importers of space technologies what items it controls. The most workable solution for accomplishing this goal is to employ broad language that acts to "catch" new technologies and specifically catalogues all items to be excluded from the USML. Again, this level of specificity is critical, given the fact that the effectiveness of U.S. export controls is largely dependent on industry selfregulation.
Arguably, the hardest decision associated with the removal of certain technologies from the USML is whether the U.S. is prepared to countenance the arming of its enemies or potential enemies with technologies that could come back to harm Americans or, at the very least, facilitate the same. Indeed, if the costume jewelry currently controlled under the ITAR is deregulated and allowed to be exported without a license (i.e. also not a licensed export under the CCL), that technology could - and probably will - end up on an Iranian or North Korean satellite at some point in the future. Although there is clearly no right answer to this philosophical quandary, it should nonetheless give pause to policy makers when determining what items should be removed from the USML.
Finding a solution to issues relating to globalization, the development of advanced space technologies elsewhere, and multilateralism are elusive and also highlight the geopolitical complexities of the export control reform debate. In this regard, the ITAR should not be made the scapegoat for the apparent decline in U.S. market share in the realm of space technologies absent empirical evidence to the contrary. Such empirical evidence does not currently exist. Nevertheless, as the ITAR is the one element of this apparent decline in market share that is within the control of U.S. policy makers, the urge might be upend it in the hopes that the U.S. will regain its hegemonic position in space. That is unlikely, irrespective of the path ultimately chosen by policy makers. As indicated above, "[n]o matter what the United States does, multipolar space will create new policy realities."340
These new multipolar realities do not portend doom for the U.S. in the realm of commercial space. The U.S. is still the leader in commercial space by a wide margin and there is little reason to believe that will not remain the case for years to come. Even so, doomsaying within the export control debate continues. One of the common themes in the export control reform debate is that revenue drives innovation and thus, the impetus for ITAR reform: open up foreign markets to the U.S. space industrial base and the resulting increases in revenue will spur further innovation and guarantee U.S. dominance in space for the future. Yet the fact is, no other government in the world currently invests in space technologies to the extent that the USG does; no other country's space industrial base currently garners the commercial revenues that are garnered by the U.S. space industrial base. As such, the notion that other countries are somehow going to achieve parity with or outpace the U.S. without a similar investment by their respective governments and/or without similar commercial revenues for their respective space industrial bases, does little more than strain credulity. At the same time, if other countries do manage to achieve parity or outpace the U.S. in the creation of innovative space technologies without making a similar government investment or without a similar commercial revenue stream, then that portends a larger problem - beyond the purported commercial revenue lost or expended as a result of the ITAR. To the extent that this is already true or to the extent that the U.S. space industrial base if failing to meet all of the needs of the USG or commercial sector, criticism of the ITAR may be overshadowing or, at the very least, obscuring an as yet unidentified larger problem with the U.S. space industrial base.
The U.S. can arguably afford the status quo for as long as it takes to get this right. To that end, the Congress and the Administration should pursue incremental ITAR reform measures before endeavoring to create an entirely new bureaucracy to control strategic exports. Such incremental measures include the passage of H.R. 2410 and the regulatory reformation of the USML (i.e. removing the costume jewelry). Should it become law, H.R. 2410 will arguably improve the ITAR by, inter alia: increasing the number of licensing officers at the DDTC; codifying existing export license application metrics; and improving the transparency of the license review process. Granting the President the authority to move all COMSATs and related components to the CCL is also a positive step. However, the President should not exercise that authority immediately. First, it is not entirely clear whether such a move would discernibly improve the efficiency of COMSAT exports considering the DDTCs average export license application metrics are currently lower than those of the BIS. Second, the aim of the ITAR is to protect those technologies in which the U.S. maintains an advantage; therefore, some COMSATs and related components should continue to require the highest controls. As the vice president of EADS North America put it, "[y]ou cannot build a big sophisticated satellite without US parts and components, you just cannot do it... [Those components might comprise no more than five percent of the satellite], but it's a very important five percent."341 The U.S. should not risk losing this "very important five percent" by reducing the regulatory hurdles associated with all COMSATs and related components. As for the remaining 95 percent, the President should consider moving those items to the CCL as part of his larger regulatory reformation of the USML, if doing so would comport with the national security prerogatives of the AECA.
The Senate should also ratify the U.K. and Australia Treaties on Defense Trade Cooperation. While it does not appear doing so would have a tremendous impact on the export or temporary import of space technologies, it would arguably quell some of the criticism that the ITAR fails to adequately distinguish between allies and adversaries in its application.
Finally, after H.R. 2410 becomes law, the USML is subject to regulatory reform, and the U.K. and Australia Treaties are ratified - and after a period sufficient to determine whether these reforms have had an impact on the export control regime - the USG should commission a comprehensive study, to: (1) determine the impact of these reforms; and (2) determine whether further reforms are necessary to achieve the national security ends of the U.S. The study findings, to the extent possible, should be based on empirical data garnered from industry-independent sources. The Congress should also request a GAO report on the same, as well as continue to hold hearings on the matter. If problems persist, then further reform efforts should be considered.
Challenging the orthodoxy that the U.S. export control regime is toxic gave this author some pause. Indeed, the number and gravitas of export control reform proponents (to say nothing of the dearth of defenders) implicates a powerful logical fallacy - argumentum ad populum. With so many believing something is true, it is decidedly uncomfortable voicing dissent - and potentially dangerous. Indeed, as Voltaire wrote, "[i]t is dangerous to be right in matters where established men are wrong."342 I will stop well short of saying that I am right. Instead, I will simply say that this is an exceedingly complex and multifaceted issue accompanied by a multitude of open questions and a decided lack of empirical data. As such, and given that the nation's security is arguably at stake, wisdom counsels a conservative approach to reform above a more radical approach.
1 U.S. Gov't Accountability Office, Export Controls, Vulnerabilities and Inefficiencies Undermine System's Ability to Protect U.S. Interests, Report No. GAO-07-1135T (Jul. 26, 2007); John Heinz, U.S. Strategic Trade: An Export Control System for the 1990s (1991) (the late Senator Heinz' book includes many of the same complaints levied against the current export control regime - including the failure to recognize that the strength of the U.S. industrial base is tied to national security).
2 See generally Committee on Science, Security, and Prosperity et. al. Beyond "Fortress America" National Security Controls on Science and Technology in a Globalized World (2009) [hereinafter Beyond "Fortress America"]; George Abbey & Neal Lane, United States Space Policy: Challenges and Opportunities Gone Astray (2009), http.7/www.amacad.org/publications/spaceUS.aspx; Guy Ben-Ari et. al. National Security and the Commercial Space Sector, Initial Analysis and Evaluation of Option for Improving Commercial Access to Space, A Report of the CSIS DefenseIndustrial Initiatives Group, Draft for Comment (Apr. 30, 2010), http://csis.org/files/publication/100430_berteau_commercial_space.pdf.
3 The Impact of U.S. Export Controls on National Security, Science and Technology Leadership, Hearing Before the H. Comm. on Foreign Affairs, 111th Cong. 10 (2010) [hereinafter The Impact of U.S. Export Controls on National Security, Science and Technology Leadership].
4 See e.g. Nat'l Security Presidential Directive (NSPD) 49, U.S. Nat'l Space Pol'y 8 (June 28, 2010).
5 As one Department of Defense Official testifying before Congress described it, "[s]ometimes there is an inherent tension in them, but we need to do our best job to balance these goals." Export Controls: Are We Protecting Security and Facilitating Exports? Hearing Before the H. Subcomm. on Terrorism, Nonproliferation and Trade of the H. Comm. on Foreign Affairs, 110th Cong. 13 (2007) [hereinafter Export Controls: Are We Protecting Security and Facilitating Exports?]. A Department of State Official, testifying at the same hearing used more pointed language, describing the goals as, "often in opposition." Id. at 14.
6 Id. at 2.
7 The Export Adminbtration Act: A Review of Outstanding Policy Considerations, Hearing Before the H Subcomm. on Terrorism, Nonproliferation and Trade of the H. Comm. on Foreign Affairs, 111th Cong. 36 (2009) [hereinafter The Export Adminbtration Act: A Review of Outstanding Policy Considerations].
8 How might an adversary or potential adversary exploit these technologies? A DoD pamphlet from the mid-1980s framed the issue thusly,
By acquiring our critical technology, the Soviets are able to develop countermeasures to our existing and even anticipated defense systems at a much faster rate and lower cost than would otherwise be possible... Acquisition of U.S. technology significantly shortens their research and development cycle and reduces the risks associated with the design of new weapons and defensive systems.8
Department of Defense (DoD) 5230.25 - PH, Control of Unclassified Technical Data with Military or Space Application (May 1985), http://www.dtic.mil/whs/directives/corres/pdf7523025ph.pdf. Though specifically relating to technology acquisition by the Soviet Union, the current imperative to guard against the transfer of technology critical to national security rings true for these same reasons. Firstly, acquisition of technology allows an adversary to reverse engineer the technology in order to indentify weaknesses and vulnerabilities. Secondly, technology acquisition reduces research & development (R&D) time and costs for potential adversaries. In other words, a potential adversary is able to field the same technologies, with few or none of the costs associated with developing that technology. The strategic advantage here is obvious. Most importantly, technology acquisition allows a potential adversary to utilize that technology. In this regard, it is important to recognize that space technologies are not just fully-formed systems (i.e. various types satellites and rockets), but rather the components, parts, accessories, and attachments that make up those systems - from solar cells, to circuitry, to fuel, to materials, to antennae. Many of these individual components, parts, accessories, and attachments also have terrestrial applications. While die National Aeronautics and Space Administration (NASA) is famous for commercial "spin-offs", it is increasingly prevalent that technologies "spin-in" to the space technology realm. Jing-Dong Yuan, The Future of Export Controls: Developing New Strategies for Nonproliferation, 30 Int'lPOL. 131, 141 (Jun. 2002). In this instance, a technology developed for commercial application is adapted to a purpose in a space system. This raises the question: do commercial technologies transform into munitions worthy of the strictest of export controls when a space application is adapted or discovered? This is a quandary and the source of much consternation among detractors of the current export control regime.
9 See Roger D. Launius, Historical Dimensions of the Space Age in Space Politics and Policy, An Evolutionary Perspective 3, 16 (Eligar Sadeh, ed., 2002); Roger Handberg, Rationales of the Space Program in Space Politics and Policy, An Evolutionary Perspective 27, 34 (Eligar Sadeh, ed., 2002); Christopher J. Bosso & W.D. Kay, Advocacy Coalitions and Space Policy in Space Politics and Policy, An Evolutionary Perspective 43, 53 (Eligar Sadeh, ed., 2002).
10 Handberg, supra note 9, at 35.
11 Indeed, "[o]nly after... the ending of the Cold War and collapse of the Soviet Union, did the original national security rationale for a national civil space program become secondary, allowing for fuller articulations of other rationales. National security has never faded out of the picture, but the emphasis has become less military and more concerned with economic competitiveness." Id at 34.
12 James A. Vedda, Space Commerce in Space Politics and Policy, An Evolutionary Perspective 201, 213 (Eligar Sadeh, ed., 2002).
13 Export Controls: Are We Protecting Security and Facilitating Exports? supra note 5, at 2.
14 U.S. Department of State Directorate of Defense Trade Controls, Defense Trade Controls Overview (2006), http://www.pmddtc.state.gov/reports/documents/defense_trade_overview_2006.pdf.
15 Dennis J. Burnett, United States of America in Export Control Law and Regulations Handbook, A Practical Guide to Military and Dual-Use Goods Trade Restrictions and Compliance 339, 346 (Yann Aubin & Arnaud ldiart, eds., 2007).
16 Ryan J. Zelnio, Whose jurisdiction over the US Commercial satellite industry? Factors affecting international security and competition, l'i Space Pol' Y 221, 222 (2007).
17 There is no precise definition for the term "dual-use" - perhaps because the term belies a precise definition. Generally, "[d]ual-use technology consists of products and know how - both tangible and intangible technology - that have potential military use, but that are primarily commercial in design, and are in fact widely traded and used for non-military purposes." Hearing on the Reauthorization of the Export Adminbtration Act and Managing Security Rbksfor High Tech Exports Before the S. Subcomm. On Int'l Trade and Finance of the S. Comm. on Banking, Housing and Urban Affairs (1999) (testimony of R. Roger Majak, Ass't Sec. for Export Admin., Department of Commerce). The lack of precision in this definition arguably lies at the heart of the export control reform debate and stems from the fact that nearly every space technology having a useful commercial application has a concomitantly useful military application and visa versa. The key is determining which of these useful dual-use technologies to protect using export controls. The question is, how does one do that when the commercial and military space sectors share many of the same essential technologies, to include: "sensors, propulsion, guidance, satellite control, spacerated electronics, encrypted communication links, and antenna design?" Vedda, supra note 12, at 216.
18 Jason A. Crook, National Insecurity: ITAR and the Technological Impairment of U.S. National Space Policy, 74 J. AlR L. & Com. 505, 5 1 0 (2009).
19 Export Administration Regulations, 15 C.F.R. § 730 et. seq. (2009) [hereinafter EAR].
20 Export Administration Act of 1979, 50 U.S.C. § 2401 et. seq. [hereinafter EAA]; Crook, supra note 18, at 510. The EAA officially expired in 1989, but has been continued through various stopgap measures - most recently by Executive Order 13222, which is renewed yearly, under the International Emergency Economic Powers Act. Ian F. Ferguson, The Export Administration Act: Evolution, Provisions, and Debate 3 (Jul. 15, 2009), available at: http://www.fas.org/sgp/crs/secrecy/RL31832.pdf.
21 Crook, supra note 18, at 510.
22 U.S. Department of Commerce, Introduction to U.S. Export Controls for the Commercial Space Industry (Oct. 2008), http://www.space.commerce.gov/library/reports/2008-10-intro2exportcontrols.pdf.
23 Zelnio, supra note 16, at 221.
24 Indeed, strategic export controls exist in large part to advance a simple yet enduring maxim: do not arm your enemies. See e.g., H. Peter van Fenema, The International Trade in Launch Services: The effects of U.S. laws, policies and practices on its development 110 (1999) ("thou shall not arm thy (tomorrow's) enemy!"). To do otherwise - to grant an enemy a military advantage he might not otherwise have, however slight - would be inimical to self-preservation. In a complex and ever-evolving world, this is often easier said than done. As a result, the do not arm your enemies maxim is often difficult for countries to put into practice - particularly for a country like the U.S., which trades in arms and related technologies so aggressively. "According to the Department of State's fiscal year 2008 budget justification to Congress, commercial export licensed or approved under the AECA exceeded $30,000,000,000"- with over $6,000,000,000 in AECA controlled items going to counties other than NATO allies and otìier major non-NATO allies, (emphasis added) Defense Trade Controls Performance Act of 2007, H.R. 4246, 1 10th Cong. § 2, para. 11. To put those figures into perspective, in 2008 only eight countries in the world reported military expenditures of more than $30,000,000,000. SIPRI Yearbook 2008: Armaments, DISARMAMENT AND INTERNATIONAL SECURITY APPENDIX 5A (2008). As such, the value of U.S. AECA exports exceeded the individual military expenditures of 96.5% of the world's countries.
25 See generally, The Cox Report: The Unanimous and Bipartisan Report of the House Select Committee on U.S. National Security and Military Commercial Concerns WiTH the People's Republic of China (Kenneth deGraffenreid ed., 1999) [hereinafter The Cox Report].
26 A launch vehicle capable of putting a commercial satellite into orbit is also capable of deploying a nuclear warhead into the territory of an adversary. See generally, van Fenema, supra note 24.
27 Hughes' incentive to act as it did was twofold: first, the failures of the Long March rockets and the failure to remedy the fairing problem which caused those failures could have made it more difficult or, at the very least, more expensive to obtain insurance for future launches. The Cox Report, supra note 25, at 265. Second, the PRC was slated to launch additional Hughes satellites and continued launch failures were clearly not in the company's best interests. Additionally, Hughes was aware of the fact that had it sought the appropriate DoS licenses for the transfer of the technical data necessary to address the fairing problems, the license applications would have been denied. By avoiding the DDTC licensing process, the national security interests of the U.S. were therefore subjugated to the economic interests of Hughes. To be sure, improving the reliability of PRC rockets, which included nuclear-tipped ICBMs pointed at the U.S., was decidedly not in the national security interests of the U.S., irrespective of the potential economic gain to Hughes. The technical data transfer involving Loral occurred under similar circumstances and was motivated by similar economic concerns. 28 Strom Thurmond National Defense Authorization Act for Fiscal Year 1999, Pub. L. No. 105-261 (1998) 112 Stat. 1920 [hereinafter STNDAA for FY 2009]. The Act reaffirmed the notion that the "business interests must not be placed above United States national security interests." Id. at § 1511(1). Moreover, it indicated that because of the national security interests at stake and the sensitivity of the technologies in question, that satellites and related items should be subject to the same export controls as munitions. In furtherance of these statements of policy, the Act transferred "all satellites and related items that were on the Commerce Control List of dual-use items on the Export Administration Regulations on the date of enactment of this Act" from the USML to the CCL. Id. at § 1513. The Act also placed a defacto embargo on PRC launch services by making the justifications required for utilizing those services impossibly high. Id. at § 1515(a). In order to justify the use of PRC launch services the President, in a report submitted to the Congress, must explain, inter alia, "[fjhe reasons why the proposed satellite launch is in the national security interests of the United States." Id. at § 1515(a)(4). It is important to note here that there is no outright prohibition against the utilization of PRC launch services, but it is telling that no U.S. President has sought congressional authorization to do so since the passage of the STNDAA for FY 1999. Finally, the Act requires the President to promulgate regulations mandating technology control plans coordinated with the DoD; improved monitoring by DoD personnel at foreign launch sites; and mandatory licenses for crash investigations. Id. at § 1514.
29 International Traffic in Arms Regulations, 22 C.F.R. § 120 et. seq. (2009) [hereinafter ITAR]. Generally speaking, the ITAR prescribes the means by which a person may seek permission from the USG to export or temporarily import defense articles and services listed on the USML. The ITAR does not, however, prescribe the means by which the DDTC makes licensing decisions. So while the policy prerogatives for licensing decisions are described in broad terms by the AECA, the ITAR sheds no further light on how these decisions are actually made. This is important in the sense that the means of obtaining a license to export or temporarily import are transparent, yet the decisions made in furtherance of the ends those means seek to protect (i.e. national security) are not. The questions underlying the DDTCs licensing officers decisions are surely more nuanced than, for example, will thb export contribute to an arms race! Yet those nuanced questions are not made public. That said, the apparent lack of transparency in the U.S. export control regime is arguably nothing more than a tempest in a teapot considering the DDTCs license denial rate is apparently around one percent. Defense Trade Controls Overview, supra note 14, at 5. Were the DDTC denying licenses in droves, this would clearly be a bigger issue. A second somewhat surprising aspect to the ITAR licensing process is its near total dependence on industry to regulate itself. The requirements to register and seek licenses under the ITAR detailed below are instigated by the regulatees. The Cox Report, supra note 25, at 25. The incidents involving Hughes and Loral in the 1990s epitomize the inherent conflicts with industry self-regulation. Indeed, "U.S. satellite manufacturers are on the honor system, to a large extent... in ensuring that no licensable technical data is exchanged in the absence of a Defense Department monitor." Id. at 294. When faced with a scenario that pits the company's interests against the national security interests of the U.S., can these companies be trusted to prioritize the latter? In the case of Hughes and Loral, the answer to that question is an unequivocal no. There is little reason to believe the answer would be any different for companies today.
30 Arms Export Control Act 22 U.S.C. § 2751 et. seq. (2009) [hereinafter AECA].
31 Introduction to U.S. Export Controls for the Commercial Space Industry, supra note 22, at 12. As the current head of the DDTC, Robert Kovac, told Congress in December 2009, "[fjhe State Department is not in the trade advocacy business." A Strategic and Economic Review of Aerospace Exports, Hearing Before the H. Subcomm. on Terrorbm, Nonproliferation and Trade of the H Comm. on Foreign Affairs, 111th Cong. 24 (2009) [hereinafter A Strategic and Economic Review of Aerospace Exports]. But what about dualuse items, such as COMSATs, which currently fall under the AECA and, by extension, the ITAR? Should the same policy prerogatives apply to those items? These questions are particularly difficult considering the purported paradoxical effects of controlling such items as munitions, namely: (1) that doing so acts to drive technological innovation offshore; and (2) that national security is actually harmed because the manufacturers of dual-use space technologies are not able to compete on a level playing field in the global marketplace. Notably, at the same December 2009 congressional hearing, Mr. Kovac's counterpart at the DoCs Bureau of Industry and Security (BIS) indicated, "on the dual-use side the economic impact of a proposed transaction is always part of the equation." Id. at 24. Were dual-use space technologies, such as COMSATs, controlled under the EAA as opposed to the AECA, the economic impact of the export would therefore be considered. That economic impact would undoubtedly include the effect of license denial or delay on the space industrial base.
32 ITAR, supra note 29, at § 120.20.
33 Id. at §120. 10.
34 See e.g., Export Controls: Are We Protecting Security and Facilitating Exports? supra note 5, at 29-30 (indicating that "Radio Shack"-comparable technologies are currently being controlled by the ITAR).
35 See e.g., Congresswoman Ellen O. Tauscher, Commercial Satellites and Export Controls: Are Things Getting Better? Address at the Center for Strategic and International Studies (Sept. 19, 2006) [transcript on file with the author].
36 See e.g., Beyond "Fortress America" supra at note 2.
37 See e.g., Mike N. Gold, Lost In Space: A Practitioner's First-Hand Perspective on Reforming the U.S. 's Obsolete, Arrogant, and Counterproductive Export Control Regime for Space-Related Systems and Technologies, 34 J. Space L. 163 (2008).
38 As John Engler, President of the National Association of Manufacturers, indicated to Congress,
Our export control system was - and to a large extent still is - based on the philosophy that if the United States won't let countries have our technology, they can't get it anywhere else because no one else has it. To a degree not recognized by our export control system, those days are gone... No longer is the United States the only country able to develop, design and manufacture cutting-edge technology. This is the reality of the globalized world and of the 21st century and these trends will accelerate.
Export Administration Act: A Review of Outstanding Policy Considerations, supra note 7, at 13.
39 See Export Controls: Are We Protecting Security and Facilitating Exports? supra note 5, at 22.
40 Beyond "Fortress America", supra note 2, at vii ("broken"); Broad, William J., For U.S. Satellite Makers, a No-Cost Bailout Bid, N.Y. Times, Apr. 2, 2009, http://www.nytimes.com/2009/04/02/science/space/02export.html (last visited on Jun. 28, 2010) ("anachronistic"); Washington, We Have a Problem, Economist, Aug. 21, 2008, http://www.economist.eom/node/l 1965279?story_id=l 1965279 (last visited on Jun. 28, 2010) ("self-defeating"); Crook, supra note 18, at 505 ("pernicious"); George S. Robinson, Impact of the U.S. International Traffic in Arms Regulations (ITAR) on International Collaboration Involving Space Research, Exploration, and Commercialization, 58 Z.L.W 23, 24 (2009) ("toxic"); Jeffrey P. Nosanov, Viewpoint: International Traffic in Arms Regulations- Controversy and Reform, 7 Astropolitics 206, 219 (2009) ("regulation run amok"); Gold, supra note 37, at 163 ("obsolete, arrogant, and counterproductive"); Craig Whitlock, Gates calls for overhaul of export licensing controls, WASH. Post, Apr. 21, 2010), http://www.washingtonpost.com/wp-dyn/content/article/20 1 0/04/20/AR20 1 0042005 1 04.html (last visited on Jun. 28, 2010) (a "byzantine amalgam" of bureaucracies).
41 U.S. Gov't Accountability Office, High Risk Series: An Update Report No. GAO07-3 10 (Jan. 2007).
42 Department of Defense, Quadrennial Defense Review Report OFebruary 2010), http://www.defense.gov/qdr/images/QDR_as_of_12FeblO_1000.pdf. The departments and agencies of the U.S. government, to include the DoD, are obliged per U.S. policy to "[u]se U.S. commercial space capabilities and services to the maximum practical extent." U.S. Nat'l Space Pol'y, supra note 4, at 10. Reportedly, ninety-five percent of U.S. military communications "travel over commercial telecommunications networks, including satellite systems." P.W. Singer, Wired For War: The Robotics Revolution and Conflict in the 21st Century 200 (2009). How might military operations be effected if those networks - currently supporting ninety-five percent of military communications - were subject to attack (kinetic, cyber or otherwise) by an adversary? It does not take a seasoned military strategist to answer this question. Indeed, degrading the lines of communication between U.S. forces, particularly when those forces have come to rely so heavily upon them, could have a devastating effect on operations. U.S. Joint Military Space Doctrine acknowledges that U.S. national security is critically and increasingly dependent upon space capabilities. Department of Defense, Joint Pub. 3-14, Space Operations ix (Jan. 6, 2009). Moreover, "this dependence is a potential vulnerability." Id. at 1. The U.S. national security infrastructure's dependence on the implements of network-centric warfare is no secret and mus any adversary would naturally seek to exploit this apparent Achilles' heel.
43 Amy Klamper, Obama ITAR Reform Could Move Satellites Back to Commerce, 20 SPACE News 6 (Jul. 6, 2009); Amy Klamper, Official Reaffirms White House Support for ITAR Reform, 20 Space News 20 (Sept. 14, 2009).
44 Foreign Relation Authorization Act, Fiscal Years 2010 and 2011, H.R. 2410,Title VIII, Export Control Reform and Security Assistance, 1 1 1th Cong. (2009) [hereinafter H.R. 2410] (Bill includes changes to the current ITAR regime, among them, authorization for the President to remove commercial satellites and related components from the USML; it passed in the House of Representatives and was forwarded to the Senate in June 2009 where it has yet to be acted upon).
45 See e.g., Export Controls on Satellite Technology: Hearing Before the H. Subcomm. on Terrorism, Nonproliferation and Trade of the H. Comm. on Foreign Affairs, 1 1 1th Cong. 40 (2009) [hereinafter Export Controls on Satellite Technology] (written Testimony of Patricia Cooper, President of the Satellite Industry Association).
46 See e.g., Center for Strategic and International Studies (CSIS), Briefing of the Working Group on the Health of the U.S. Space Industrial Base and the Impact of Export Controls (Feb. 2008), http://csis.org/files/media/csis/pubs/02 1 908_csis_spaceindustryitar_final.pdf [hereinafter 2008CSISSTUDY].
47 See generally, Export Controls on Satellite Technology, supra note 45.
48 H.R. 2410, supra note 44, at § 826.
49 White House, Office of the Press Secretary, Fact Sheet on the President's Export Control Reform Initiative (Apr. 20, 2010), http://www.whitehouse.gov/the-press-office/fact-sheetpresidents-export-control-reform-initiative (last visited Jun. 28, 2010).
50 Henry Louis Mencken, Prejudices: Second Series 158 (1st ed. 1921).
51 So said Congressional Representative Edward Royce during a hearing on satellite export controls before the House Subcommittee on Terrorism, Nonproliferation and Trade. Export Controls on Satellite Technology, supra note 45, at 4.
52 To wit: "In the midst of this conversation, they discovered thirty or forty windmills all together on the plain, which the knight no sooner perceived, than he said 'Chance has conducted our affairs even better than we could either wish or hope for: look over there, friend Sancho, and behold thirty or forty outrageous giants with whom I intend to engage in battle, and put every one of them to death, so that we may begin to enrich ourselves with their spoils; for it is a meritorious warfare, and serviceable both to God and man to extirpate such a wicked race from the face of the earth.' - -'What giants do you mean?' said Sancho Panza in amaze. "Those you see over yonder,' replied his master, 'with vast extended arms; some of which are two leagues long.' - ? would your worship would take notice,' replied Sancho, 'that those you see yonder are no giants, but windmills; and what seem arms to you are sails, which being turned with the wind, make the millstone work." Miguel de Cervantes Saavedra, The History and Adventures of the Renowned Don Quixote, Vol. 151-52 (Dr. Smollett trans., London 1 799) ( 1 605).
53 As one Department of Commerce Official put it,
...our relationship with emerging powers are not as simple or black and white as our relationship was with the Soviet Union. There is no better example of this than China, which is neither our adversary nor our ally. And to reflect this, our export controls on China seek to permit legitimate civilian trade while prudently hedging against the uncertainties of a significant Chinese military expansion.
Export Controls: Are We Protecting Security and Facilitating Exports? supra note 5, at 19.
54 See e.g., Freedom to Fly, Economist (Apr. 22, 2009), http://www.economist.com/node/135251 15?story_id=135251 15 (last visited on Jun. 28, 2010) (discussing an incident involving Bigelow Aerospace; this incident is examined in section U.B.2.a, infra).
55 Heinz, supra note 1, at 4 (Senator Heinz' proposals for wholesale reform of the export control system are remarkably similar to the wholesale reform effort currently being offered by the Obama Administration).
56 Id at 1,45.
57 Id. at 103.
58 Id. at 3.
59 Id. at 37, 104.
60 Id. at 36.
61 Id. at 37.
62 Id. at 26, 27, and 32.
63 Id at 105.
64 Id a 113.
65 Id. at 114.
66 See Committee on Science, Engineering, and Public Policy et. al., Balancing the National Interest: U.S. National Security Export Controls and Global Economic Competition (1987).
67 Beyond "Fortress America", supra note 2, at viii.
68 Jeff Foust, Boring but important policy developments, Space Review (Nov. 2, 2009), http://www.thespacereview.eom/article/1503/l (last visited on Jun. 28, 2010).
69 Beyond "Fortress America", supra note 2 at 81.
70 Are We Protecting Security and Facilitating Exports? supra note 5; A Strategic and Economic Review of Aerospace Exports, supra note 31; Export Controls on Satellite Technology, supra note 45; The Export Administration Act: A Review of Outstanding Policy Considerations, supra note 7; 7Ae Impact of U.S. Export Controls on National Security, Science and Technology Leadership, supra note 3; Export Compliance: Ensuring Safety, Increasing Efficiency, Hearing Before the H. Subcomm. on Terrorism, Nonproliferation and Trade of the H. Comm. on Foreign Affairs, 110th Cong. (2008) [hereinafter Export Compliance: Ensuring Safety, Increasing Efficiency].
71 Howard L. Berman, Editorial, U.S. Export Control Policy in Dire Need of an Update, San Jose Mercury News (Jan. 15, 2010), http://www.hcfa.house.gov/lll/press_011510.pdf (last visited on Jun. 28,2010).
72 See e.g. Export Controls on Satellite Technology, supra note 41, at 3-4 (what Senator Heinz dubbed "economic security").
73 Press Release, Office of Senate Foreign Relations Committee Chairman John Kerry, Chairman Kerry Opening Statement For U.S. Defense Trade Treaties Hearing (Dec. 10, 2009), http://kerry .senate.gov/press/release/?id=ffdde8 1 f-5 1 c7-4b87-97f5-8b74 1 80 lb 1 53 (last visited on Jun. 28, 2010). The Treaties, which are substantively the same, would authorize the President to promulgate regulations under the ITAR to authorize the export or transfer of certain defense articles and defense services between the U.S. and the U.K. and between the U.S. and Australia without a DDTC license when in support of: (1) Combined military operations; (2) Cooperative security and defense research, development, production, and support programs; (3) Mutually agreed security and defense projects where the end-user is the Government of the [U.K.] or the Government of Australia; or (4) [USG] end-use." Defense Trade Cooperation Treaties, Hearing Before the S. Foreign Relations Comm. 5 (Dec. 10, 2009) (statement of Assistant Secretary Andrew Shapiro). While some aspects of these Treaties may tangentially benefit the U.S. commercial space sector, it does not appear that COMSATs or other dual-use commercial satellites would be eligible for the license exemptions under the regulations promulgated pursuant to either Treaty. The strictures of the Treaties, each of which relate to national security issues, would appear to require such a result. As such, one commentator has indicated that, "the positive effects of the Treaties] on the aerospace industry could be negligible. P.J. Blount, The ITAR Treaty and its Implications for U.S. Space Exploration Policy and the Commercial Space Industry 73 J. AiR L. & COM. 705, 720 (2008). It appears, therefore, that for now Canada will remain the only country with a broad exemption under the ITAR - to include license exemptions for COMSATs. A very broad reading of the Treaties could produce a different result. As indicated above, ninetyfive percent of U.S. military communications reportedly "travel over commercial telecommunications networks, including satellite systems." Singer, supra note 42 at 200. Presumably, the military forces of both the U.K. and Australia are similarly dependant on commercial communication networks to support their respective operations. In addition, frequent and unfettered communication between coalition partners during combined military operations is a predicate to success. It could be argued, therefore, that the export of a COMSAT from the U.S. to either the U.K. or Australia - both of which are currently engaged in combined operations with the U.S. in Afghanistan - would in fact support combined operations by facilitating communication between the forces of the U.S. and U.K. and the U.S. and Australia (both inside and outside of Afghanistan).
74 EXPORT CONTROLS, VULNERABILITIES AND INEFFICIENCIES UNDERMINE SYSTEM'S ABILITY TO PROTECT U.S. INTERESTS, supra note 1; High Risk Series: An Update, supra note 41; U.S. Gov't Accountability Office, Defense Trade: Analysis of Support for Recent Initiatives, Report No. GAO/NSIAD-00-191 (Aug. 2000); U.S. Gov't Accountability Office, Defense Trade: Arms Export Control System in the Post- 9/1 1 Environment, Report No. GAO-05-234 (Feb. 2005); U.S. Gov't Accountability Office, Defense Trade: Lessons to Be Learned for the Country Export Exemption, Report No. GAO02-63 (Mar. 2002).
75 Candidate Barack Obama, Space Policy Statement, Advancing the Frontiers of Space Exploration (2008), http://www.barackobama.com/pdf/policy/Space_Fact_Sheet_FINAL.pdf.
76 President Barack Obama, Remarks by the President in the State of the Union Address (Jan. 27, 2010), http://www.whitehouse.gov/the-press-office/remarks-president-state-unionaddress (last visited on Jun. 28, 2010).
77 See e.g., Tauscher, supra note 35.
78 Fact Sheet on the President's Export Control Reform Initiative, supra note 49; Whitlock, supra note 46.
79 For example, some Republicans are reportedly concerned that "the Obama administration may be preparing to loosen export control regulations, which they see as a dangerous concession to part of the business sector that increases risks of technology and innovation losses to countries such as China." Josh Rogin, Team Obama convenes major secret meeting on export controls, FOREIGN POLICY (Jan. 27, 2010), http://thecable.foreignpolicy.com/posts/2010/01/27/team_obama_convenes_major_secret_me etingonexportcontrols (last visited on Jun. 28, 2010).
80 It is also helpful that Secretary Gates is supported in his views by the uniform component of the DoD, with the Commander of U.S. Strategic Command, General Kevin P. Chilton, indicating before the House Committee on Armed Services in April 2009,
I remain concerned that our own civil and commercial space enterprise, which is essential to the military industrial base, may be unnecessarily constrained by export control legislation and regulation. Clearly, legitimate national security concerns must continue to underlie the need to restrict the export of certain space-related technologies, equipment, and services. However, appropriate flexibility to permit relevant technology transfers when commercially availability renders their control no longer necessary should be considered to help ensure our space industrial base for the future.
Statement of General Kevin P. Chilton, available at: http://armedservices.house.gov/pdfs/SF03 1 709/Chilton_Testimony03 1 709.pdf.
81 BEYOND "FORTRESS AMERICA", supra note 2, at 20.
82 See generally, Industrial College of the Armed Forces (ICAF), Space Industry Study 2007, http://www.ndu.edu/icaf/programs/academic/industry/reports/2007/pdf7icaf-isreport-space-2007.pdf.
83 In his speech announcing the Obama administrations export control reform agenda, Secretary Gates related the following, "Not too long ago, a British C-17 [a Unmanufactured military transport aircraft] aircraft spent hours disabled on the ground in Australia - not because the needed part was unavailable, but because U.S. law required the Australians to seek U.S. permission before doing the repair... These are two of our strongest allies for God's sake!" Whitlock, supra note 46.
84 DEPARTMENT OF DEFENSE, DEFENSE INDUSTRIAL BASE ASSESSMENT: U.S. SPACE INDUSTRY, FINAL REPORT 1 (Aug. 31, 2007), http://www.bis.doc.gov/defenseindustrialbaseprograms/osies/defmarketresearchfts/exportco ntrolfinalreport08-3 1 -07master ___ 3 - bis-net-link-version - 1 0 1 707-receipt-from-afrl.pdf (The BIS is the DDTCs counterpart office at the Department of Commerce) [hereinafter DEFENSE INDUSTRIAL BASE ASSESSMENT].
85 Space Foundation, ITAR and the U.S. Space Industry (2008), http://www.spacefoundation.org/docs/SpaceFoundation_rTAR.pdf.
86 Id. at 15.
87 Export Controls on Satellite Technology, supra note 45, at 45.
88 Id; 2008 CSIS Study, supra note 46.
89 2008 CSIS Study, supra note 46 at 33.
90 Lewis Carroll, The Hunting of the Snark: An Agony in Eight Fits 146 (New York, MacMillan 1891)46.
91 The $50 million in compliance cost figure is also cited in Beyond "Fortress America." Supra note 2, at 27.
92 Export Controls on Satellite Technology, supra note 45 at 1 1.
93 Again, this is nothing new. In attempting to determine whether the economic costs of export controls were adversely affecting industry in the early 1990s, one author concluded:
. . .based on admittedly sketchy macroeconomic and microeconomic data, high technology trade and market share data, and government data on licensing patterns and the regulatory process, the economic cost of controls is not excessive. Much contrary anecdotal evidence is available from the private sector concerning the damage controls cause U.S. hightechnology producers. However, unless concrete and quantifiable data showing an exclusive and causal link between controls and lost sales over a sustained period is publically released by exporters, their claims remain suspect, (emphasis added)
DOUGLAS E. MCDANIEL, UNITED STATES TECHNOLOGY EXPORT CONTROL: AN ASSESSMENT xv (1993).
94 Supra note 46.
95 CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES (CSIS), PRESERVING AMERICA'S STRENGTH IN SATELLITE TECHNOLOGY 39 (Apr. 2002), http://csis.org/files/media/csis/pubs/081023_lewis_satellitetech.pdf.
97 Export Controls on Satellite Technology, supra note 45, at 21-23. (Study's author explaining its findings before a House Subcommittee hearing)
98 Berman, supra note 71.
99 2008 CSIS Study, supra note 46, at 10.
100 The National Academies (under which the NRC falls) have been involved in the export control reform debate since at least 1987. In fact, Balancing the National Interests: U.S. National Security Export Controls and Global Economic Compétition, supra note 66, published by the organization that year, shares much in common with Beyond "Fortress America", published some 22 years later. Most notably, the books juxtapose the U.S. export control regime with the new realities imposed by globalization, as well as the deleterious effects on national security when economically deprived companies fail to innovate technologically. Id. at 9. Interestingly, the 1987 book offers a caveat in its preface, to wit: "...we determined that reliable quantitative data regarding the effectiveness of controls - and the impact of controls on economic development and trade - continue to be very difficult to obtain." Id. at viii. Beyond "Fortress America" includes no such caveat. Whether the National Academies profess a higher degree of certitude with regard to its more recent findings is unclear, but that can certainly be implied by the decision, whether conscious or unconscious, not to include a caveat to those findings.
101 Beyond "Fortress America", supra note 2.
102 The Impact of U.S. Export Controls on National Security, Science and Technology Leadership, supra note 3, at 25.
103 Rogia supra note 79.
105 BEYOND "FORTRESS AMERICA", supra note 2, at vii.
106 Id. at 61.
107 Id. at 59; HEINZ, supra note 1, at 37, 104.
108 BEYOND "FORTRESS AMERICA", supra note 2, at 61.
109 Id at 62.
110 Id. at 81.
111 Whitlock, supra note 46.
112 The Impact of U.S. Export Controls on National Security, Science and Technology Leadership, supra note 3, at 45.
113 Klamper, Obama ITAR Reform Could Move Satellites Back to Commerce, supra note 43; Klamper, Official Reaffirms White House Support for ITAR Reform, supra note 43.
114 HR. 2410, supra note 44.
115 See e.g., Export Controls on Satellite Technology supra note 45, at 40 (written Testimony of Patricia Cooper, President of the Satellite Industry Association).
116 Bosso & Kay, supra note 9, at 46.
117 Eligar Sadeh & Brenda Vallance, The policy process in Space and Defense Policy 125, 128 (Damon Coletta & Fances T. Pilch eds., 2009).
118 Fact Sheet on the President's Export Control Reform Initiative, supra note 49. The issue has also been framed thusly: "[i]f you guard your toothbrushes and diamonds with equal zeal, you'll probably lose fewer toothbrushes and more diamonds." Michael J. Noble, Export Controls and United States Space Power, 6 AsTROPOLiTics 251, 298 (2008) (quoting McGeorge Bundy, National Security Advisor to Presidents Kennedy and Johnson).
119 Whereby "the pace of change of our human-created technology is accelerating and that its powers are expanding at an exponential pace." Singer, supra note 42, at 97-99.
120 Noble, supra note 1 18, at 268.
121 Klamper, Obama ITAR Reform Could Move Satellites Back to Commerce, supra note 43.
122 BEYOND "FORTRESS AMERICA", supra note 2, at 41 .
123 2010 QUADRENNIAL DEFENSE REVIEW REPORT, supra note 38 at 83.
124 The Impact of U.S. Export Controls on National Security, Science and Technology Leadership, supra note 3, at 43.
125 Id. Some in the Congress have identified the offshoring of U.S. technology jobs and manufacturing capabilities as a threat to U.S. national security. See generally, A Strategic and Economic Review of Aerospace Exports, supra note 31. Offshoring also raises ITAR issues. For instance, if an engineer for a U.S. satellite manufacturer collaborates with an offshore U.S. subcontractor that employs foreign engineers on an ITAR-controlled item, either a metaphorical "Chinese Wall" must be constructed between the foreign engineers and the technical data to be disclosed or a DDTC license must be sought prior to the collaboration occurring. There are clearly inefficiencies inherent in either sequestering foreign persons employed by U.S. manufactures (i.e. reducing the personnel dedicated to working on a particular project) or seeking a DDTC license prior to the occurrence of any collaborative effort (i.e. potentially delaying the collaboration for purposes of obtaining a license) involving an ITAR-controlled item. At the same time and to the extent that this is a problem, it could also be argued that U.S. industry has largely brought this upon itself by moving U.S. aerospace jobs overseas - i.e. offshoring. Indeed, one congressman lamented in a December 2009 House hearing on export controls, "[s]o many American companies are now American in name only, having sent their manufacturing facilities, along with millions of American jobs, overseas." Id. at 6. It follows that if export control reforms include the loosening of restrictions on communications between U.S. and foreign employees of U.S. manufacturers of space technologies, then those reforms will arguably facilitate further outsourcing. This is but one of myriad examples in which ITAR could adversely effect the interests of the industry. At the same time, under this scenario, the ITAR has either protected the technical data by denying it to the U.S. subcontractor's foreign engineers (in the case of a license being denied or the foreign engineers being sequestered from the collaboration), the DDTC has determined the "export" of the technical data is not contrary to the national security interests of the U.S. (in the case of a license being issued), or the ITAR has not facilitated the offshoring of U.S. high technology jobs and manufacturing capabilities. Of course, whether the ITAR has succeeded or failed in this scenario is almost entirely dependant on one's perspective and the relative importance placed on the interest implicated - and thus the counterposing interests of the export control reform debate are exposed.
126 David A. Turner & James Vedda, The impact of foreign space development on US defense policy in Space and Defense Policy 312, 324 (Damon Coletta & Fances T. Pilch eds., 2009).
127 Benjamin Sutherland, Why America is Lost in Space, Newsweek (Jan. 31, 2009), http://www.newsweek.com/2009/01/30/why-america-is-lost-in-space.html (last visited on Jun. 28, 2010).
128 Noble, supra note 1 18, at 279.
129 The Export Administration Act: A Review of Outstanding Policy Considerations, supra note 7 at 7.
130 Robin F. Laird & Alain Dupas, U.S. Strategy 2020: Facing a Multipolar Future, 21 Space News 19, 19 (Mar. 1,2010).
131 Id. at 21.
132 Foust, supra note 68.
133 A Strategic and Economic Review of Aerospace Exports, supra note 31, at 29.
134 Earthbound, Economist (Aug. 21, 2008), http://www.economist.eom/node/l 1965352?story_id=l 1965352 (last visited on Jun. 28, 2010).
135 ITAR supra note 29 at § 121.1, Category XV.
136 See e.g., 2008 CSIS Study, supra note 42.
137 The Impact of U.S. Export Controls on National Security, Science and Technology Leadership, supra note 3, at 43.
138 The rate of technological change is exponential, rather than linear - so whereas once a stone wheel has been invented, it need not be reinvented to produce it from wood, vulcanized rubber, synthetics, and so on, ad infinitum. There is also a cross-pollination effect occurring, in which advances in one field lead to advances in another - so whereas once the wheel has been invented and attached to a barrow, it need not be reinvented to attach it to a cart, carriage, locomotive, aircraft, and so on, ad infinitum. This effect has been described as "riding someone else's exponentials." Singer, supra note 42, at 99. Why is this important to a policy discussion about export controls? As then Congresswoman Ellen Tauscher put it in 2006, "[t]he United States has not been able to distinguish between those technologies where there is still [an] advantage... that should be protected and those satellite technologies that are routine, commercial, and available from other sources." Supra note 35. Given "the law of accelerating returns" this is not surprising, but it also begs the question: is it possible to create a regulatory bureaucracy capable of matching the exponential pace of technological change?
139 Beyond "Fortress America", supra note 2 at, 37.
140 ITAR supra note 25 at § 121.1, Category XV.
141 DEFENSE TRADE: LESSONS TO BE LEARNED FOR THE COUNTRY EXPORT EXEMPTION, supra note 74 at 7.
142 See e.g., Berman, supra note 71 (lamenting the complexity of the current ITAR regime).
143 2008 CSIS Study, supra note 46, at 1 1.
146 Beyond "Fortress America", supra note 2, at 64.
147 The Impact of U.S. Export Controls on National Security, supra note 3, at 29.
148 See Yann Aubin & Arnaud Idiart, Overall Introduction in Export Control Law and Regulations Handbook, A Practical Guide to Military and Dual-Use Goods Trade Restrictions and Compliance 1, 10 (Yann Aubin & Arnaud Idiart, eds., 2007).
149 Art I of the Treaty on the Non-Proliferation of Nuclear Weapons, Washington D.C, London, Moscow, 1 July 1968; Art ?? of the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on Their Destruction, Washington D.C, London, Moscow, 10 April 1972; Art 1, 1(a) Chemical Weapons Convention, Paris, 13 January 1993.
150 Missile Technology Control Regime (MTCR), http://www.mtcr.info; Hague Code of Conduct Against Ballistic Missile Proliferation (HCOC), http://www.un.org/News/Press/docs/2004/gadis3286.doc.htm; The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, http://www.wassenaar.org.
151 Francis Lyall & Paul B. Larsen, Space Law: A Treatise 462 (2009).
152 Aubin & Idiart, supra note 148 at 10.
153 Beyond "Fortress America", supra note 2, at 41 .
154 Yuan, supra note 8, at 144 (the Nuclear Non-Proliferation Treaty, the Biological and Toxin Weapons Convention, and the Chemical Weapons Convention are examples of multilateral export control regimes which enjoy a high degree of consensus).
155 The Wassenaar Arrangement, supra note 1 50.
156 Id. Wassenaar Arrangement members are (countries appearing in bold are not considered NATO or major non-NATO allies of the U.S.): Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Korea, Romania, Russian Federation, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom and United States. NATO and major non-NATO allies of the U.S. not party to The Wassenaar Arrangement are: Bahrain, Egypt, Iceland, Israel, Jordan, Kuwait, Morocco, Pakistan, the Philippines, Thailand, and Taiwan. Ibid.
157 Id. at Dual-Use Goods Control List, Categories 5, 6, and 9.
158 That is not to say the U.S.' defacto veto is no longer viable in all instances. To the contrary, as the vice president of EADS North America puts it, "[y]ou cannot build a big sophisticated satellite without US parts and components, you just cannot do it... [Those components might comprise no more than five percent of the satellite], but it's a very important five percent." Jeff Foust, The uphill battle for export control reform, Space Review (Dec. 1, 2008), http://www.thespacereview.eom/article/1259/l (last visited on Jun. 28,2010).
159 Stephanie G. Neuman, Power, Influence, and Hierarchy: Defense Industries in a Unipolar World, 21 Defence and Peace Economics 105, 127 (2010).
160 Christopher Drew, Airbus 's Parent Gambles on Tanker Contract, N. Y. Times (Apr. 20, 2010), htm://www.nytimes.com/2010/04/2^usiness/21tanker.html (last visited on Jun. 28, 2010).
161 Newman, supra note 159, at 124.
162 Duncan Hunter National Defense Authorization Act of 2009, Pub.L. No. 110-417, § 1233, 122 Stat. 4639 (Oct. 14, 2008).
163 Michael C. Mineiro, New Paradigms of Export Control: A Case Study of the U.S. Commercial Communication Satellite Export Control Regime (Jun. 2010) (unpublished D.C.L. Thesis, McGiIl University) (on file with author).
164 There is a question as to whether coercive measures such as this might violate the World Trade Organization (WTO) plurilateral Agreement on Government Procurement (GPA), to which the U.S. is a party. However, the GPA includes a specific carve out for national security issues, namely: "[n]othing in this Agreement shall be construed to prevent any Party from taking any action or not disclosing any information which it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defence purposes." Id. at Article XXIII Exceptions to the Agreement, http://www.wto.org/english/docs_e/legal_e/gpr-94_02_e.htm (last visited on Jun. 28, 2010). As such, and if carefully drafted and narrowly applied, such coercive actions arguably would not violate the GPA.
165 Laird & Dupas, supra note 130, at 19.
166 The Export Administration Act: A Review of Outstanding Policy Considerations, supra note 7, at 6; see also Noble, supra note 1 1 8 at 300 ("By harmonizing export controls with other potential suppliers... a 'unified front' may be presented thereby avoiding a U.S. export 'Maginot line.'").
167 H.R. 2410, supra note 44, at § 826.
168 Defense Trade: Lessons to be Learned for the Country Export Exemption, supra note 74 at 1.
169 Id. at 3.
171 Id. at 4.
172 Id. The following is an example offered by the GAO: a Chinese national established a Canadian company and used the Canadian exemption to acquire a focal plane array-longrange infrared camera. The camera was shipped to China from Canada without DoS approval. The same individual subsequently ordered an additional 400 cameras. As in the first instance, the Chinese national specified that the Canadian exemption could be used. Id. at 21.
173 Id. at 5.
174 Opinion, The Candidates and the World: II; The Military Consensus, Undone, N. Y. TIMES (Oct. 23, 1988), http://www.nytimes.com/1988/10/23/opimon/me-candidates-and-the-worldii-the-military-consensus-undone.html (last visited on Jun. 28, 2010).
175 Gold, supra note 37, at 172.
176 Freedom to Fly, supra note 54 (ECONOMIST); Earthbound, supra note 134 ^ECONOMIST); Sutherland, supra note 127 (Newsweek); Gold, id. (J. Space L.).
177 Gold, supra note 37, at 168.
178 Id at 172.
179 ITAR, supra note 29, at § 121.1, Category XV.
180 The Cox Report, supra note 22, at 296.
181 Gold, supra note 37, at 173.
182 A Good Start, Defense News (Apr. 26, 2010), http://www.defensenews.com/story .php?i=4597779 (last visited on Jun. 28, 2010).
183 Export Controls: Are We Protecting Security and Facilitating Exports? supra note 5, at 10.
184 See INSTITUTE FOR DEFENSE ANALYSIS, EXPORT CONTROLS AND THE U.S. DEFENSE INDUSTRIAL BASE 30 (Jan. 2007), http://www.dtic.mil/cgibin/GetTRDoc7AD= ADA465592&Location=U2&doc=GetTRDoc.pd f (a USG contracted export control study in which an "emphasis was placed on employing quantitative metrics of [impacts on the space industrial base], getting 'beyond anecdotes'" determined that quantifiable data on business health and trends "did not reveal major impacts of export controls.") [hereinafter 2007 IDA Study].
185 DEFENSE INDUSTRIAL BASE ASSESSMENT, supra note 84.
186 Export Controls: Are We Protecting Security and Facilitating Exports? supra note 5, at 29-30.
187 Noble, supra note 1 18, at 253.
188 Export Controls on Satellite Technology, supra note 45, at 54. Imprecision in the defining of quantitative data and the comparison of differing temporal periods leads to different statistics being bandied about. For example, Futron reports that between 1999-2008, the U.S. manufacturers produced 47% (461) of the world's satellites (the 1999-2008 time-period actually covers more of the post-STNDAA for FY 1999 than the 1997-2007 time-period quoted by Congressman Connolly and yet the U.S. gained market share, rather than lost it); Russia, a distant second, produced 21% (212). Futron Corporation, Futron's 2009 Space Competitiveness Index: A Comparative Analysis of How Countries Invest In and Benefit from Space Industry 10 (Jun. 2009), http://wwwl.futron.com/resource_center/store/Space_Competitiveness_Index/Futron's%2020 09%20SCI%20-%20Executive%20Summary.pdf.
189 2008 CSIS Study, supra note 42.
190 Export Controls on Satellite Technology, supra note 45, at 54.
191 See Noble, supra note 1 1 1, at 279.
192 Broad, supra note 46.
193 Robinson, supra note 46, at 24.
194 Bruce Linster, Space and the economy, in Space and Defense Policy 51, 52-53 (Damon Coletta & Fances T. Pilch eds., 2009).
195 Id. at 53.
196 Id. at 53, 60.
197 Put simply, customers now have more options. Those who want to avoid the issues associated with ITAR, whether real or perceived, or have unstable relations wim the U.S., can go elsewhere to meet their COMSAT needs. For example, the PRC built and launched Venezuela's first satellite in 2008. See U.S. Federal Aviation Administration, 2008 Commercial Space Transportation Year in Review 14, htto://www.faa.gov/about/ofBce_org/headquarters_offices/ast/media/2008%20Year%20in%2 0Review.pdf.
198 See Zelnio, supra note 16, at 228-229.
199 Zelnio distinguishes between "contracts awarded to bidders existing within their own countries' borders by their national governments. . .and those considered intra-company sales" (i.e. non-competitive) and those that are open to foreign competition on the open market (i.e. competitive). Id. at 223-224.
200 See id. at 227.
201 See generally, id.
202 2007 IDA Study, supra note 184, at 3.
203 Id. at 3. The 2007 IDA Study also cited the following as potential contributors to the market drop: "firm-specific issues such as R&D investment, manufacturing efficiency, and market strategies, as well as macroeconomic issues such as skilled labor availability and cost, exchange rate policy, tariffs and legal barriers." Id. at 2.
204 The debate is not entirely counterfactual. For example, a 2009 Futron analysis found that, "European commercial competitiveness remained largely unchanged between 2008 and 2009, providing a statistical counterpoint to perceptions that the European market has gained dramatically from efforts to develop alternatives to satellites and equipment controlled by U.S. export regulations." Futron's 2009 Space Competitiveness Index, supra note 188, at 6.
205 FUTRON CORPORATION, FUTRON'S 2008 SPACE COMPETITIVENESS INDEX: A COMPARATIVE ANALYSIS OF HOW COUNTRIES INVEST IN AND BENEFIT FROM SPACE INDUSTRY (Feb. 2008) 3-5 (on file with the author).
206 Noble, supra note 1 18, at 274.
207 See Xavier Pasco, Toward a European military space architecture in Space and Defense Policy 294 (Damon Coletta & Fances T. Pilch eds., 2009).
208 See id. at 294.
209 See Noble, supra note 1 18 at 255; Beyond "Fortress America", supra note 2, at 25.
210 See Feathering the Falcon's nest ECONOMIST (Jun. 5, 2010), http.7/www.economist.com/blogs/babbage/2010/06/space_flight (last visited on Jun. 28, 2010).
211 See Noble, supra note 1 18, at 278; ICAF Space Industry Study 2007, supra note 82, at 1 ("The U.S. and other spacefaring nations clearly understand the security advantages that accrue from the ability to exploit the space domain and, accordingly, have created national polices that emphasize the development and preservation of such abilities . . . often independent of cost.").
212 President John F. Kennedy, Special Message to the Congress on Urgent National Needs, delivered before a joint session of Congress (May 25, 1961).
214 See Futron's 2008 Space Competitiveness Index, supra note 205, at 1 ("Nations invest in space partly for the pride associated with the technological advances that participation in space requires").
215 Jim Yardley, China Sends a Man Into Orbit, Entering the U.S.-Russian Club, N. Y. TIMES (Oct. 15, 2003), ht^://www.nytimes.com/2003/10/15/world/china-sends-a-man-into-orbitentering-the-us-russian-club.html (last visited on Jun. 28, 2010).
216 Somini Sengupta, India Launches Unmanned Orbiter to Moon, N. Y. Times (Oct. 21, 2008), http://www.nytimes.com/2008/10/22/world/asia/22indiamoon.html78br (last visited on Jun. 28,2010).
217 Noble, supra note 1 18, at 256.
218 See id. at 258. In 2009, "Iran conducted its first successful orbital launch... The payload was a small scientific satellite called Omid, the Farsi word for 'hope'. The launch vehicle was a Safir three-stage orbital rocket. The non-commercial flight reached orbit and successfully deployed its small payload into LEO." U.S. Federal Aviation Administration, 2009 Commercial Space Transportation Year in Review 17, http://www.faa.gov/about/office_org/headquarters_offices/ast/media/year_in_review_2009.p df.
219 To that point, it is curious that the ITAR's U.S. critics - which include some of those purportedly acting in the best economic interests of the U.S. space industry - are so hyperbolic in their criticisms of the regime. In attempting to achieve reform, these critics may in fact be doing little more than driving potential customers of U.S. space technologies into the arms of its competitors.
220 2008 CSIS Study, supra note 46, at 7.
221 Noble, supra note 1 18, at 251.
222 National Foreign Trade Counsil Mission Statement (adopted February 2001), 2010 Priorities, http://www.nftc.org/default/general%20information/2010NFTCgoalsandprioritiesWV.pdf (last visited on Jun. 28, 2010).
223 Foust, supra note 68.
224 Department of Defense, Office of the Assistant Secretary of Defense (Public Affairs), DoD Background Briefing with Senior Defense Officials from the Pentagon (Apr. 19, 2010), http://www.defense.gov/Transcripts/Transcript.aspx?TranscriptID=4610 (last visited on Jun. 28, 2010).
225 Bosso & Kay, supra note 9, at 55.
226 Eric Lipton, With Obama, Regulations Are Back in Fashion, N. Y. TIMES (May 12, 201 0), http://www.nytimes.com/2010/05/13/us/politics/13rules.html (last visited on Jun 28, 2010).
227 2008 CSI 227 2008 CSIS Study, supra note 46, at 16.
228 Id. at 17.
229 JARED L. FORTUNE & JOSHUA A. MERRILL, IDENTIFYING SPACE INDUSTRIAL BASE ISSUES (2007), available at: http://www/aiaa.org. The U.S. also spends more on civil space than any other country. Futron's 2008 Space Competitiveness Index, supra note 205, at 3. This is important as well in the sense that USG civil space expenditures feed than same space industrial base as military and national security space expenditures.
230 Futron's 2008 Space Competitiveness Index, supra note 205, at 3.
231 See e.g., id. at 5 (Russia and China are ranked third and fifth respectively in the ability to deliver space products and services despite that fact that "the government sector dominates their national space industries.").
232 Supra note 3, at 3.
233 HEINZ, supra note 1, at 104.
234 See Historic Figures, Neville Chamberlain (1869-1940), http://www.bbc.co.ul^history/historic_figures/chamberlain_arthur_neville.shtml (last visited on 28 Jun. 2010).
235 John Tiemey, Doomsayers Beware, A Bright Future Beckons, N. Y. TIMES (May 17, 2010), http://www.nytimes.com/2010/05/18/science/18tier.html (last visited on Jun. 28, 2010).
236 BEYOND "FORTRESS AMERICA", supra note 2 at 23.
237 Supra note 46.
238 Id. at 22. Since the study was issued, the PRC has also conducted a successful spacewalk. David Barboza, Chinese Astronaut Takes Nation 's First Spacewalk, N. Y. Times (Sept. 27, 2008), http://www.nytimes.com/2008/09/28/world/asia/28china.html?scp=l&sq=chinese%20spacéw alk&st=cse (last visited on Jun. 28, 2010).
239 U.S. FEDERAL AVIATION ADMINISTRATION, COMMERCIAL SPACE TRANSPORTATION YEARS IN REVIEW (2005-2009), available at: http://www.faa.gov/about/ofiice_org/headquarters_offices/ast/reports_studies/year_review/.
241 FUTRON'S 2008 SPACE COMPETITIVENESS INDEX, supra note 205, at 5 (In Russia and China "the government sector dominates their national space industries.")
242 Put differently, "[t]he best economic studies satisfy themselves with 'sizing up' the problem as opposed to making definitive quantitative statements." 2007 IDA Study, supra note 184, at 3.
243 Richard Kusiolek, ITAR: Balancing the Global Playing Field? 23 VIA Satellite 7, 9 (Aug. 1, 2008).
244 DEFENSE INDUSTRIAL "BASE ASSESSMENT, supra note 84, at 14.
245 2008 CSIS Study, supra note 46, at 53.
246 See Export Controls on Satellite Technology, supra note 45, at 20 (testimony of Pierre Chao).
247 DEFENSE INDUSTRIAL BASE ASSESSMENT, supra note 84, at 34, 48; 2008 CSIS Study, supra note 46, at 54.
248 Export Controls on Satellite Technology, supra note 45, at 54.
249 Supra note 66, at viii.
250 The Impact of U.S. Export Controls on National Security, Science and Technology, supra note 3, at 44.
251 Export Controls on Satellite Technology, supra note 45, at 38.
253 Department of State Directorate of Defense Trade Controls, License Processing Times, http://www.pmddtc.state.gov/metrics/index.html (last visited on Jun. 28, 2010).
254 Yuan, supra note 8, at 145.
255 A Strategic and Economic Review of Aerospace Exports, supra note 3 1 , at 1 6.
256 See DEFENSE TRADE CONTROLS OVERVIEW, supra note 14, at 5.
257 Export Controls: Are We Protecting Security and Facilitating Exports? supra note 5, at 17 ("In the past two years the [DDTC] has processed roughly 14,000 license applications for the United Kingdom, with only 18 licenses denied, none of which were exports for the U.K. government.")
258 It is also possible that some companies are simply not applying for export applications either because: (1) the companies believe the application will be denied; (2) the costs associated with the registration and license processing are too high; or (3) the real or perceived problems with the ITAR licensing process dissuade the companies from applying, irrespective of the high probability of the application being approved. This fact must be kept in mind when extrapolations are made based on DDTC denial rates.
259 2008 CSIS Study, supra note 46.
260 DEFENSE INDUSTRIAL BASE ASSESSMENT, supra note 84, at 24.
261 The author posed several of these questions to the DDTC, but as of this writing, has not received a response.
262 See EXPORT CONTROLS, VULNERABILITIES AND INEFFICIENCIES UNDERMINE SYSTEM'S ABILITY TO PROTECT U.S. INTERESTS, supra note 1 , at 7.
263 A Strategic and Economic Review of Aerospace Exports, supra note 3 1 , at 16.
264 On 22 January 2008, National Security Policy Directive (NSPD) 56, Defense Trade Reform, was implemented to streamline the DDTCs performance. Id (NSPD-56 is not publically available). It imposed a 60-day limit on the processing of export license applications, unless national security concerns required otherwise. Id. Improved metrics occurred as a result of more efficient processes, as well as an improved electronic licensing system (DTrade). Id. H.R. 2140, discussed below, would codify the NSPD-56 licensing metrics.
266 ITAR supra note 29, at § 123.15.
267 Id. at §120.22.
268 Id. at § 124.15(a)(1).
269 A Strategic and Economic Review of Aerospace Exports, supra note 31, at 16.
270 DEPARTMENT OF COMMERCE, BUREAU OF INDUSTRY AND SECURITY, ANNUAL REPORT TO THE CONGRESS FOR FISCAL YEAR 2008 8, http://www.bis.doc.gov/news/2009/bis_annual_report_2008.pdf.
271 In FY 2009, the highest value items processed by the BIS - aero gas turbine engines, valued at approximately $281 million - enjoyed an average license application processing time of 43 days. A Strategic and Economic Review of Aerospace Exports, supra note 31, at 11. However, value and complexity are not necessarily synonymous.
272 Foust, supra note 68.
274 HEINZ, supra note 1, at 39.
276 Are We Protecting Security and Facilitating Exports? supra note 5, at 22 (comment relates to the notion that allies and adversaries are similarly treated under the current U.S. export control regime and, as a result of that, allies are not incentivized to demonstrate what the U.S. considers to be good export control behavior; the carrots in this metaphor are validate end-user programs - whereby allies are rewarded for good export control behavior through the imposition of fewer controls).
277 Indeed, at a House hearing on the impact of export controls, Representative Dana Rohrabacher indicated, "I think we had better start discriminating about which countries we treat as our friends because we treat our friends that same way we treat our enemies." The Impact of U.S. Export Controls on National Security, Science and Technology Leadership, supra note 3, at 58.
278 See e.g, ITAR supra note 29, at § 123.10, § 124.10.
279 For example, U.S. policy with regard to the use of PRC launch services could easily be subverted if COMSATs were exported to allies without a license prohibiting or limiting reexport. Indeed, once a license-free COMSAT is exported, the U.S. would have little recourse against the allied country if it elected to employ PRC launch services.
280 See e.g., ITAR supra note 29, at § 123.15 (expedited congressional certification for U.S. allies). The ITAR includes a number of provisions, which distinguish NATO and major nonNATO allies, as well as EU and ESA member countries from the rest of the world. See e.g., id. at § 120.31, § 120.32. These countries are, without exception, singled out within the ITAR for preferred treatment. In other words, the regulatory hurdles associated with the specific ITAR provisions are lower for these favored countries. Conversely, the ITAR also includes a blacklist - whereby certain countries are presumed to be ineligible to receive U.S. defense articles or defense services. Id. at § 126.1. These countries include, inter alia: Belarus, Cuba, Eritrea, Iran, North Korea, Syria, Venezuela, Burma, China, Liberia, and Sudan. Id. As such, a license application submitted to the DDTC for a proposed export or temporary import of a USML-controlled defense article or service would almost certainly be denied.
281 DDTC-registered U.S. persons engaged in the business of exporting or temporarily importing COMSATs, as well as associated equipments and technical data, are allowed to submit multiple DDTC applications without meeting many of the ITAR's documentary requirements, under certain circumstances. Id. at § 123.27. Among these is the requirement that the transaction involve only NATO and major non-NATO ally countries and that the foreign government or foreign company involved is approved by the USG for purposes of this exception. Id. This exception - which appears to provide a "blanket license" for certain transactions among allied nations - arguably reflects the national security interest model reflected in Figure 1, supra. Indeed, as the national security interests implicated are relatively low, particularly given the closely prescribed circumstances under which the exception is available, so too are the regulatory hurdles associated with the export.
282 Export Controls on Satellite Technology, supra note 45, at 1.
283 Supra note 35.
284 Where Representative Sherman and Undersecretary Tauscher are correct - at least with regard to Europe - is that the U.S. controls COMSATs as munitions, whereas the Europeans do not. See generally, Aubin & Idiart, supra note 148. COMSATs constituted 88 percent of the total commercial payloads launched between 2005-2009. Commercial Space Transportation Years in Review 2005-2009, supra note 241. Of the 122 COMSATs launched during that period, 65 were manufactured by U.S. companies (47 percent) and 41 were manufactured by European companies (29 percent). Id. The remaining country's COMSAT percentages were in the single digits - to include the Russian Federation, Canada, Israel, India, Japan, and the PRC. Id.
285 The exception being the handful of countries subject to an absolute arms embargo under the ITAR - -and China, which is subject to a defacto embargo as a result of the STNDAA for FY 1999.
286 See Arnaud Idiart & Virgile Delaboudiniere, France in EXPORT CONTROL LAW AND REGULATIONS HANDBOOK, A PRACTICAL GUIDE TO MILITARY AND DUAL-USE GOODS TRADE RESTRICTIONS AND COMPLIANCE 127, 152 (Yann Aubin & Arnaud Idiart, eds., 2007).
287 COMMERCIAL SPACE TRANSPORTATION YEARS IN REVIEW 2005-2009, supra note 241.
288 FUTRON'S 2008 SPACE COMPETITIVENESS INDEX, supra note 205 at 5.
289 COMMERCIAL SPACE TRANSPORTATION YEARS IN REVIEW 2005-2009, supra note 241.
290 Council Regulation (EC) No. 428/2009, Setting up a Community Regime for the Control of Exports, Transfer, Brokering and Transit of Dual-Use Items (May 5, 2009), available at: http://trade.ec.europa.eu/doclib/docs/2009/june/tradoc_143390.pdf.
291 WILLIAM SHAKESPEARE, TEMPEST, act 2, sc. 1.
292 H.R. 2410, supra note 44.
293 Id. at § 802(1).
294 See Foust, supra note 68.
295 H.R. 2410, supra note 44, at § 804(a)(1).
296 Id. at § 804(a)(2)-(3).
297 Id. at § 804(b)(2)(B).
298 Id. at § 804(c)(1)(A)-(B).
299 Id. at § 804(d)(1)(A)-(B).
300 See e.g., Export Controls: Are We Protecting Security and Facilitating Exports? supra note 5.
301 Department of State Directorate of Defense Trade Controls, Key Personnel, http://www.pmddtc.state.gov/about/key_personnel.html (last visited on Apr. 9, 2010).
303 Export Controls: Are We Protecting Security and Facilitating Exports? supra note 5, at 34.
304 H.R. 2410, supra note 44, at § 805(b).
305 AECA, supra note 26 at § 2778(f)(1).
306 H.R. 2410, supra note 44, at § 808(b). It is somewhat surprising, given both the rapidity of technological development as well as the criticisms levied at the makeup of the USML, that the Congress did not opt for a more ambitious minimum timeframe for this review. Five years seems an inordinately long period to conduct the review, particularly when considering that at least one of the aforementioned assessments recommends the USML be dismantled and rebuilt in toto every year. Beyond "Fortress America", supra note 2, at 59.
307 H.R. 2410, supra note 44, at § 808(c).
308 Id. at § 810(a).
309 Id. at § 810(b).
310 Id. at § 810(a).
311 Id. at § 826(a) (these items are on the USML as a result of §1513(a) of the STNDAA for FY 1999).
312 Id at § 826(b).
313 Broad, supra note 46.
314 Fact Sheet on the President's Export Control Reform Initiative, supra note 49.
315 Amy Klamper, Obama Memo Puts Export Reform on Front Burner, Space News (Jan. 18, 2010), http://www.spacenews.eom/policy/l 00115-obama-memo-puts-export-reform-frontburner.html (last visited on Jun. 28, 2010).
316 Given President Obama's pledge of transparency and openness in government, the lack of transparency on this issue is somewhat surprising. Indeed, the President has indicated, "My Administration is committed to creating an unprecedented level of openness in Government. We will work together to ensure the public trust and establish a system of transparency, public participation, and collaboration. Openness will strengthen our democracy and promote efficiency and effectiveness in Government." Barack Obama, Transparency and Open Government (undated Memorandum for the Heads of Executive Departments and Agencies), http://www.whitehouse.gov/the_press_office/Transparency_and_Open_Government/ (last visited on Jun. 28, 2010). Moreover, the President indicated, "[information maintained by the Federal Government is a national asset. My Administration will take appropriate action, consistent with law and policy, to disclose information rapidly in forms that the public can readily find and use." Id. Were the Administration to release the review (or at the very least the data considered by the interagency task-force) the public would have a better insight into why fundamental reform agenda was chosen over a less ambitious reform agenda. As it is, the public is left to speculate.
317 Fact Sheet on the President's Export Control Reform Initiative, supra note 49.
320 Amy Klamper, White House Seeks to Consolidate Export Licensing, Space News (Apr. 20, 2010), http://www.spacenews.com/policy/white-house-seeks-consolidate-exportlicensing.html (last visited on Jun. 28, 2010).
321 HEINZ, supra note 1, at 147-149.
322 Id. at 150.
323 Id. at x.
324 FUTRON'S 2008 SPACE COMPETITIVENESS INDEX, supra note 205, at 3.
325 DoD Background Briefing with Senior Defense Officials from the Pentagon, supra note 224.
327 ITAR, supra note 29, at § 121.1, Category XV.
328 DoD Background Briefing with Senior Defense Officials from the Pentagon, supra note 224.
331 Id; Fact Sheet on the President's Export Control Reform Initiative, supra note 49.
332 Fact Sheet on the President's Export Control Reform Initiative, supra note 49.
333 U.S. House of Representatives Comm. on Foreign Affairs, Berman statement on speech by Defense Secretary Gates regarding President Obama's Export Control Policy Review (Apr. 20, 2010), available at: http://www.internationalrelations.house.gov/press_display.asp?id=726 (last visited on Jun. 28, 2010).
334 DoD Background Briefing with Senior Defense Officials from the Pentagon, supra note 224.
335 Noble, supra note 118, at 251.
336 DEFENSE TRADE: ANALYSIS OF SUPPORT FOR RECENT INITIATIVES, supra note 74, at 17. In 2000, the Clinton Administration, the U.S. defense industry, and foreign governments were each expressing a high level of concern about the adverse affects of U.S. export controls on cross-border cooperation with allies. Id. at 15. As a result, the Administration "unveiled 17 proposals to expedite and reform the U.S. export control system, which it characterized as the first major post-Cold War adjustment to the U.S. system." Id. The 17 proposals were collectively named the Defense Trade Security Initiative (DTSI). Among the 17 proposals was a streamlined license process for COMSAT components and technical data when all parties to the program are NATO or major non-NATO allies. Department of State Directorate of Defense Trade Controls, Seventeen Agreed Proposals to Defense Trade Security Initiative, http://www.pmddtc.state.gov/licensing/documents/DTSI_17proposals.pdf (last visited on Jim. 28, 2010). Shortly after the unveiling of the DTSI, the GAO concluded that no analysis had been conducted by the Clinton Administration regarding the underlying problems with the export control system and, as a result, was dubious of the Administration's claim that the DTSI would achieve its stated goals of: "(1) increasing interoperability, (2) enhancing defense capabilities, and (3) promoting transatlantic defense industrial cooperation and competition." Defense Trade: Analysis of Support for Recent Initiatives, supra note 74, at 15. In a 2005 report, the GAO concluded that while the DoS claimed the DTSI reforms were successful, the DoS had neither "evaluated the initiatives' effects on the arms export control system" nor "provided data supporting its contention." Defense Trade: Arms Export Control System in the Post- 9/1 1 Environment, supra note 74, at 4. The GAO's findings aside, ten years have passed since the DTSI was unveiled and the concerns of 2000 persist. Indeed, the Obama Administration, the U.S. defense industry and foreign governments all continue to express a high level of concern about the adverse effects of U.S. export controls on cross-border cooperation with allies. Does this Administration, unlike the Administration of President Clinton, have "a clear and common understanding of perceived versus real problems and their underlying causes and an appropriate analytical framework to tie changes to desired goals?" If not, it follows that ten years hence, the same concerns with the export control system may persist.
337 Heinz, supra note 1, at 39 ("[t]the [DoC] is commercially unable to balance trade promotion and trade controls.").
338 A Strategic and Economic Review of Aerospace Exports, supra note 31, at 16(16 days); DOC ANNUAL REPORT TO THE CONGRESS FOR FISCAL YEAR 2008, supra note 270, at 8 (27 days); see e.g., H.R. 4246, supra note 24, at § 1(7) ("In 2006, the Department of State processed over three times as many licensing applications as the Department of Commerce with about a fifth of the staff of the Department of Commerce.").
339 EXPORT CONTROLS, VULNERABILITIES AND INEFFICIENCIES, supra note 1, at 7.
340 Laird & Dupas, supra note 130.
341 Foust, supra note 68.
342 Originally (in old French), "...il eft dangereux d'avoir raifon dans des chofes où des hommes accrédités ont tort." Voltaire, Le Siècle de Louis XTV 113 (London 1788).
MAJOR MATTHEW D. BURRIS*
* Major Matthew D. Burns, University of Tulsa, B.A. and J.D., LL.M. Air and Space Law, McGiIl University, is currently assigned to USSTRATCOM, Offutt AFB, Nebraska. He is a member of the Oklahoma State Bar. The views expressed in this article are those of the author and do not reflect the official policy or position of the United States Air Force, Department of Defense, or the U.S. Government. Only publically available information was used in the preparation and presentation of this work.