Release of National Security Report on Revising U.S. Export Controls on Satellites

Today, the Departments of Defense and State released a joint final report to Congress on the national security imperative for revising the nation’s export controls on satellites and related items. These items are controlled on the United States Munitions List (USML) by statute, based on the requirements of the National Defense Authorization Act for Fiscal Year 1999, which makes them the sole USML items for which the President does not have the legal authority to appropriately adjust the controls to ensure they meet current and anticipated U.S. national security requirements and to ensure they do not unintentionally harm the U.S. satellite industry and its supplier base.

Both the Congress and the Obama Administration recognize the importance of this critical sector to the nation’s national and economic security. The report, prepared by technical and space policy experts from the Departments of Defense and State, with support from the Intelligence Community and NASA, was conducted in accordance with Section 1248 of the National Defense Authorization Act for Fiscal Year 2010.

The preparation and submission of the report is one part of the Administration’s broader review of U.S. space policy and of the nation’s export control system. The review has generated the new U.S. National Space Policy, the National Security Space Strategy, and the development of the methodology to rebuild the USML as part of the President’s Export Control Reform Initiative. As a result, today’s report benefits from the most comprehensive review to date of the controls on the export of satellites and related items.

The Findings

1. Compared to the United States, other nations have fewer export controls on commercial space and space-related items, including other advanced space-capable nations who are also our partners in the Wassenaar Arrangement for Export Controls for Conventional Arms and Dual-Use Goods and Technologies. These Wassenaar-member countries control these items as dual-use (i.e., non-munitions) items.

2. Over the past 15 years, a substantial number of commercial satellite systems, subsystems, components, and related technologies have become less critical to national security due to the transition from military to predominantly civilian uses. Examples include direct broadcast television, satellite communications, and earth mapping. During this period, other countries have become more proficient in space technologies.

3. As a result, U.S. export controls over these items should reflect their decreased sensitivity while still ensuring that they cannot be used to significantly improve the military capabilities of another country.

4. Export of space-related items to our Allies and closest partners presents a low risk to national security and should be subject to fewer restrictions than exports and re-exports to other countries.

5. The United States should maintain strict controls on transfers of non-critical space-related items to end users and for end uses that are likely to be used against U.S. national interests. This means maintaining the status quo for exports and re-exports to those destinations.

6. USML Special Export Controls (SECs) remain necessary to mitigate against the substantial risks associated with the following services: satellite failures and anomaly resolution; launch know-how; launch services; and launch failure analysis. Space export control processes would also be improved if legislation allowed for flexible application of SECs and required industry to reimburse the Department of Defense for all SECs.

7. If authorized by Congress, the risks of removing space-related dual-use items from the USML could be acceptably managed through controls and licensing policies under the Commerce Control List (CCL). Without such authorization, national security will be harmed because the current export controls required of satellites and related items harm the U.S. satellite industrial base.

The Recommended Changes

Based on the findings, the report recommends the continued need for certain space-related items to remain on the Department of State-administered USML because they and related services contain critical components and technologies – along with the implicit expertise to create and use them – that provide the United States with a critical military or intelligence advantage in space. These items include:

· Satellites that perform a purely military or intelligence mission;

· Remote sensing satellites with high performance parameters;

· Parts and components unique to the above satellite types and not common to dual-use satellites; and

· Services in support of foreign launch operations for USML and non-USML designated satellites.

The assessment determined that the following items would be more appropriately controlled on the Commerce Control List (CCL) administered by the Department of Commerce:

· Communications satellites (COMSATs) that do not contain classified components;

· Remote sensing satellites with performance parameters below certain thresholds; and

· Parts and components associated with these satellites and with performance parameters below thresholds specified for items remaining on the USML.

Implications

If implemented, these recommendations would result in:

· Prioritizing U.S. export controls for satellites and related items to better focus U.S. Government resources on the most sensitive items, while facilitating secure trade with Allies and close trading partners.

· Synchronizing the Department of State and the Department of Commerce’s licensing policies, ensuring continued effective implementation of prohibitions to end-users and end-uses of concern.

· Improving the long-term health and competitiveness of the U.S. satellite industrial base. According to one industry assessment the U.S. space industry, including its supplier chain, remains disadvantaged by current satellite export controls, noting that the U.S. held 73 percent of the worldwide share of satellite exports in 1995 but by 2005 that number had fallen a staggering 25 percent.

· Helping to eliminate the design-out of U.S. origin items, especially from second and third tier suppliers.

· Bolstering the security of supply, particularly from these same second and third tier suppliers, to the U.S. national security community.

· Helping to create reliable supplier relationships between U.S. exporters and foreign customers in Allied and partner countries.

Modernizing our satellite-related export controls is essential to meeting the challenges of the 21st century. The Administration is committed to continue to work with Congress to enact legislation to ensure that U.S. export controls meet our current and anticipated national security requirements.