Where Industry and Security Intersect
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On March 18, 1999, the Department of Commerce published a final rule in the Federal Register removing commercial communications satellites from the Commerce Control List (CCL) and retransferring these items, effective March 15, 1999, to the Department of State under the United States Munitions List, as required by the Strom Thurmond National Defense Authorization Act of 1999 (P.L. 105-261). On March 22, 1999, the State Department published a corresponding amendment to the International Traffic in Arms Regulations (ITAR) accepting jurisdiction and designating commercial communications satellites on the United States Munitions List (USML).
Most companies in the U.S. commercial satellite industry have indicated that the transfer of jurisdiction to the Department of State has adversely affected their business operations due to increased license application processing times. In addition, European and other allied companies and governments have indicated that the slow pace of licensing hinders international cooperation in the commercial space industry and creates a bias against U.S. suppliers.
The transfer of commercial communications satellites licensing responsibility to the Department of State additionally resulted in confusion among exporters concerning the licensing jurisdiction for satellite parts and components not specified in the transfer. The Administration has initiated a review of 16 items on the Commerce Control List that contain "space qualified" items to determine whether any of these items should be transferred from the export licensing jurisdiction of the Commerce Department to that of the State Department. To date, the National Security Council has not made a final determination. In the interim, licensing jurisdiction for the items in question will remain with the Commerce Department.
The licensing policy for hot section technology and commercial communications satellites is as follows:
A. The United States requires a license for exports and reexports to all destinations, except Canada, for the hot section technology and for satellites. Effective March 15, 1999, the licensing jurisdiction for commercial communication satellites was retransferred to the USML. Hot section technology remains on the Commerce Control List. These items are controlled for national security and foreign policy reasons.
B. The United States reviews all license applications for the above items on a case-by-case basis to determine whether the export or reexport is consistent with U.S. national security and foreign policy interests.
This control provides a mechanism for the United States to monitor the export of these items in order to prevent their use in instances that would adversely effect our weapons of mass destruction nonproliferation goals or the military balance within a region.
1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary of Commerce has determined that the control is likely to achieve the intended purpose of denying exports when the export would be contrary to U.S. national security or foreign policy interests.
2. Compatibility with Foreign Policy Objectives. The Secretary has also determined that the controls are compatible with the foreign policy objectives of the United States. The control is consistent with U.S. foreign policy goals to promote peace and stability and to prevent U.S. exports when they would contribute to inappropriate military capabilities abroad.
3. Reaction of Other Countries. The Secretary has determined that the reaction of other countries to this control is not likely to render the control ineffective in achieving its intended foreign policy purpose or to be counterproductive to U.S. foreign policy interests. Other allied countries control commercial communications satellites and hot section technology for commercial jet engines as dual-use commodities. These countries also recognize the desirability of restricting goods that could compromise shared security and foreign policy interests.
4. Economic Impact. Due to the transfer of licensing jurisdiction of commercial communications satellites in FY 1999 to the Department of State, the Department of Commerce did not review any satellite licenses for FY 2000. However, the Commerce Department approved 76 licenses for related technology and returned without action (RWAd) 17 license applications. Of the 76 approved, all but 4 involved 9E003 "hot section" technology. There is no dollar value associated with technology transfers.
5. Enforcement of Control. The United States does not experience any unusual problems in enforcing these controls. Manufacturers and intermediary companies are familiar with U.S. controls on these products and technology. These items are also subject to multilateral controls, therefore, cooperation from foreign government enforcement agencies is useful in preventing and punishing violators.
As needed, the Department of Commerce consults with the Transportation Technical Advisory Committee, although no major changes are envisioned to controls remaining on the Commerce Control List.
On November 6, 2000, the Department of Commerce, via the Federal Register and via BXA's web page, solicited comments from industry on the effectiveness of foreign policy-based export controls. No comments were received specific to the controls described in this chapter. A more detailed review of the comments is available in Appendix I.
The United States has taken the lead in international efforts to stem the proliferation of sensitive items, urging other supplier nations to adopt and apply export controls comparable to those of the United States. The major industrial partners of the United States maintain export controls on this equipment and technology and control them as dual-use commodities. Pursuant to their agreement to establish a new regime for the control of conventional arms and sensitive dual-use goods and technologies, the participants in the Wassenaar Arrangement have agreed to control these items and to ensure that transfers of such items are carried out responsibly and in furtherance of international peace and security.
The United States has undertaken a wide range of diplomatic endeavors, both bilateral and multilateral, to encourage the proper control over these items. The United States has specifically
encouraged efforts to prevent the unauthorized use or diversion of these items to activities contrary to U.S. security and foreign policy concerns.
Although the United States has been the world's leader in this technology, other countries produce commercial communications satellites and hot section technology. Most producers of commercial communications satellites and hot section technology are members of the Wassenaar Arrangement and are controlling these items as dual-use items (albeit with varying licensing policies).