Satellite Sweepstakes

Commercial satellite export controls to be loosened under House bill opposed by Obama administration

May 22, 2012

The Obama administration is opposing House legislation that would loosen restrictions on exports of U.S. satellites that were imposed after two U.S. companies illegally improved China’s strategic missiles through satellite launch deals in the 1990s.

The commercial satellite amendment was attached to the fiscal 2013 defense authorization bill that passed the House on Friday. The measure would give President Obama unfettered control over exports of U.S. commercial satellites, critics say.

Congressional aides said the satellite decontrol effort would overturn current law requiring presidential waivers for sensitive military-related exports to China that were imposed after the 1989 Tiananmen massacre, when Chinese military forces fired on unarmed protesters in Beijing’s main square.

Those sanctions were then applied to commercial satellites in a 1998 law that reclassified foreign commercial satellite sales as defense items to be regulated by the State Department.

If the current House provisions and companion legislation in the Senate become law in some form later this year, the new system of export controls would end the requirement for politically difficult presidential waivers on satellite exports to China, and ultimately allow Obama to sell more sensitive high-technology goods, the aides said.

Industry trade groups applauded the adoption of the satellite decontrol amendment, which was sponsored by Rep. Adam Smith, (D., Wash.) ranking Democrat on the House Armed Services Committee. The House provisions must now be reconciled in the Senate where similar legislation—in the form of a freestanding bill drafted by Sen. Michael Bennet (R.,Colo.)—will be introduced.

The debate also could impact at least one Senate race. Sen. Orrin Hatch (R., Utah) is facing a tough primary challenge for reelection from conservative Dan Liljenquist, a former state senator.

Asked if Hatch will support Senate legislation giving Obama blanket authority for satellite exports, Hatch spokesman Matthew Harakal told the Free Beacon, "We’re keeping a close eye on it."

A Senate aide said Republicans could oppose the House legislation over concerns it would create new legal and enforcement problems and potentially allow sensitive, military-related technology to be exported to China and other foreign countries more easily.

A State Department official told Congress last week prior to passage of the Smith amendment that "the administration strongly objects" to the legislation.

Alan Lang, an official in the State Department’s office of legislative affairs, wrote in an email to Congress that the amendment "would harm our national security" by focusing attention on "threats that matter least."

Lang’s email stated that the amendment would undermine cooperation with allies in sharing defense costs, weaken the defense industry, hamper job creation, and encourage foreign satellite manufacturers to avoid the use of U.S. parts and components.

The legislation calls for the administration to notify Congress of specific items that will be decontrolled under the administration’s export control initiative by moving the goods from one list of controlled items to a second list of goods that are easier to sell overseas.

The amendment would also eliminate presidential waiver authority for arms embargoes, which Lang said was a key presidential foreign policy power.

Additionally, the administration is opposing the amendment’s call for submitting seven reports to Congress every year on satellite exports, which according to Lang would produce a "significant drain on existing resources."

"The net result of the requirements of this amendment would mean a significant delay in any changes to export controls specific to satellites and related items, contrary to the stated intent of the amendment," said Lang, director of Global and Functional Affairs within the Bureau of Legislative Affairs.

According to the Senate aide, the House legislation creates a new "commercial military list" that currently has no legal basis in any statute and thus lacks defined offenses in law for violations.

"With no statutory anchor, there is zero enforceability for any satellites or related items that sit on such a list," the aide said. "This does not belong in a bill that could simply state that [commercial satellites] be transferred. Further, it provides a needed political basis for this administration to open the flood gates with its commercial military list."

At issue in the legislation are restrictions imposed under the 1998 National Defense Authorization Act that moved control for regulating exports of all commercial satellites from the more business-friendly Commerce Department to the State Department, which handles U.S. arms sales.

The shift of satellite controls "was based on a specific and detailed oversight process, not a political decision," the Senate aide said. "Any attempt to enact changes to these provisions this year on the basis of this report would be premature."

The 1998 law was passed following the illegal technology transfers to China’s rocket and missile program in 1995 and 1996 by Hughes Electronics and Space Systems/Loral following failed launches of U.S. satellites on Chinese boosters.

As part of subsequent launch failure investigations involving the companies and China’s state-run rocket maker, the two companies helped improve the reliability of the rockets that in China are nearly identical to nuclear-tipped strategic missile systems.

Loral in 2002 paid the U.S. government a $20 million fine to settle charges it illegally exported embargoed technology. Boeing, which acquired Hughes, paid $32 million for its role in violating export controls.

A 1998 State Department report on the damage to U.S. national security caused by illegal technology exports concluded that "the lessons learned by the Chinese are inherently applicable to their missile programs… since [space launch vehicles] and ICBMs share many common technologies."

According to the Senate aide, the pending House legislation lacks clarity regarding exports of satellites to China. Current law does not block U.S. satellite launches on Chinese boosters, but does impose procedures aimed at ensuring U.S. national security is not compromised through the technology and cooperation needed to launch a satellite on a Chinese booster.

Current law also gives the president authority to waive satellite export restrictions as long as reports are sent to Congress on any waivers.

The new House legislation would shift the burden of the president’s decisions to the Congress, the aide said.

One key flaw of the House amendment and a similar draft Senate bill is that both measures do not seek to control the sharing of public domain information with China on satellite launches, and thus the legislation would, in effect, produce the complete decontrol of satellite launch cooperation.

Both the Loral and Hughes compromises in the 1990s involved such public domain information, which became technically a "defense service" when the data was given to China’s missile manufacturer by the U.S. companies. 

The debate over satellite export legislation followed a congressionally mandated administration report on the risks to national security from moving satellites and related technology from the munitions control list.

Critics of the report said its findings failed to address adequately the problems of sharing missile-related data with China through satellite cooperation.

Nevertheless, U.S. satellite industry and trade groups are pushing Congress to pass the legislation needed to loosen the satellite export controls despite the fact that the report was sent to Capitol Hill last month and took nearly two years to produce.

The administration report warned that China is developing space weapons for use against U.S. missiles and that loosening export controls would likely boost China’s space warfare programs.

The report said that relaxing satellite export controls would help China "purchase and acquire more of these items, and in turn, further reduce the technological edge of the United States’ and its allies’ space assets."

The Senate aide said the administration satellite decontrol proposal also would help European satellite makers in their competition with U.S. manufacturers.

"If President Obama seriously thinks making space exports to China is in our interest, he should use his power, not ask Congress to take the heat for him," the aide said.