Telecommunication

During the 58th International Astronautical Congress in Hyderabad, India, many speakers from emerging space nations all voiced a concern over the United States International Traffic and Arms Regulations (ITAR). The speakers charged that the United States ITAR is holding back growth in the industry. All of the speakers made a point to explain that both cooperation and competition were necessary to ensure growth of the space industry, and the ITAR is holding emerging space nations back.

China claimed that the U.S. policy was the largest hurdle to be faced by the growth of new actors in the industry, while India claimed that there is more risk to non-US players because of the ITAR rules

(Hmmmm, I guess the US Government is glad to hear that news, because that is exactly the intent of the ITAR. — John Black)

Hua Changzhi, vice president of China Great Wall Corp. pointed out those U.S. satellite manufacturers had lost market share in recent years, he remarked, “This is the price paid by U.S. policy”. Ray A. Williamson, research professor, Space Policy Institute at George Washington University in the United States said that change in ITAR would make it easier for the international space industry to operate, “unfortunately, given the current political situation in the United States, I don’t think ITAR regime will change for the next five to ten years”.

Executive director of Antrix Corp Ltd, the commercial arm of Indian Space Research Organization, K.R. Sridhara Murthy called for addressing certain issues at a political level especially regarding the export policies of advanced countries. Murthy also called for a unified licensing system for space services and complementary ground services and also underlined a need to change policy and regulations to facilitate easy access to remote sensing data used by many companies. Another one of his concerns was the merger of smaller companies with the “big players” in the industry, explaining that the dominant players in the industry hurt the market and consumers. The industry is also faced with the fact that the orbit and spectrum resources are in the hands of the governments.

More information:

US regulations restrict space industry growth (Earth Times)

US regulations restrict space industry growth (India PR Wire)

Peter Selding of SPACE.com reported China has successfully launched a Thales satellite that did not contain any US components controlled by the International Traffic in Arms Regulations (“ITAR”). Any non-US origin satellite with one or more ITAR-controlled part (regardless of value) would require approval by the US State Department for transfer to China — and the State Department would not approve transfers of any commercial communication satellite with ITAR content to China. The Thales ITAR-free satellite proves that it is possible for companies to build satellites and sell them without having to deal with the cumbersome and sometimes prohibitive ITAR controls.

According to the report, the Chinasat 6B telecommunications satellite is the fourth satellite built for the Chinese satellite-fleet operators by Thales Alenia Space. And it looks like it doesn’t cost all that much to avoid ITAR components. According to the report, avoiding ITAR restrictions added approximately six percent to the cost of the satellite due to lack of options in choosing more competitive parts suppliers and the currency used in payment. Thales Alenia Space has pointed out going to a fully ITAR-free product line is out of the question because of the risk of not being able to keep up with the market demand as ITAR-free satellites rely on a supply chain that would have difficulty increasing deliveries in the short term. This sale might be a scary prospect for US satellite makers and US satellite component suppliers. The State Department will not approve license for transfers of US satellites or foreign-origin satellites with US content to China. Now Thales seems to have a monopoly on sales of satellites to China, or, at least Thales is going to get sales that neither US satellite manufacturers nor any foreign manufacturers who use ITAR components will get. Clearly, in attempting to prevent satellite sales to China, the US has used the ITAR to dam up most of the river while leaving an opening wide enough to launch a Thales satellite through. So, the Chinese get communication satellites and US manufacturers get bumpkiss (i.e., nothing). Well, perhaps US policy makers still feel good about the symbolic nature of the US “no satellite sales to China” policy, and as US policy makers are perched high atop their self-designated moral high ground, they will have a clear view of the ITAR-free satellite sales to China.

I will not ask if anybody in the US Government has unofficially threatened Thales or attempted to convince Thales to not go down the ITAR-free path.

Company Name Changed to Thales Alenia Space

In an effort to facilitate continued licensed defense trade between the United States and the recently renamed Thales Alenia Space, the DDTC has published guidance for dealings with the company and its subsidiaries.

Satellite designer and manufacturer Alcatel Alenia Space SAS (AAS), has its stock held by Alcatel-Lucent Participations SA (France) and Finmeccanica SpA (Italy). Subsidiaries of AAS are located in France, Italy, Belgium and Spain. As the result of a transaction reassigning its current stock, AAS has changed its name to Thales Alenia Space. Subsidiaries have also changed their names accordingly.

For the purposes of exporting against valid licenses after the transaction closing dates (April & May 2007), exporters should note the name change at the time of the AES filing. Submitting a DSP-119 is not necessary.

Example: “Thales Alenia Space France” formerly “Alcatel Alenia Space France”

For the purposes of current TAA and MLA agreements, an amendment must be submitted to each agreement to reflect the name change. Failure to submit the necessary amendment within 60 days of the transaction closing date for each entity will result in the termination of the agreement.

For the purposes of agreements currently in review, those pending approval will be processed under the submitted name. Once approvals are granted, exporters must change the name to the new entity before execution of the agreement or amendment and must note the change in the cover letter of the submission of the executed agreement.

For new licenses & agreements, exporters must supply the new legal name of the entity. New agreements submitted 60 days after specified closing dates with the incorrect name will be returned without action.

The relevant closing dates for entities affected by this change are as follows:

• Alcatel Alenia Space in France on April 6, 2007
• Alcatel Alenia Space in Belgium on April 11, 2007
• Alcatel Alenia Space in Spain on April 11, 2007
• Alcatel Alenia Space in Italy on May 4, 2007

Affected Companies and their former and current names can be viewed, along with the complete guidelines, at:

• www.pmddtc.state.gov/docs/exporter_guidance_AAS.doc (Word doc)

What Happened & What You Need to Do

On August 31, 2006, the Commerce Department published regulations that move Libya off the small list of countries subject to severe US export and reexport controls. Generally speaking, the Export Administration Regulations (EAR) now treat Libya similar to countries such as the PRC, Russia, and Armenia. Read More

Within a matter of weeks the Bush Administration made significant changes to the US export/reexport controls on Libya and Syria. The United States relaxed its controls on Libya and tightened its controls on Syria. The new controls on these countries are relatively straight-forward, despite the fact that these changes are based on a relatively large number of official document (two executive orders from the White House, a new law, several Treasury Department general licenses, and at least two Federal Register notices).

Here are the new licensing requirements and restrictions in a nutshell.

LIBYA

• Items classified as EAR99 under the Export Administration Regulations (EAR) are eligible for export/reexport as No License Required (NLR) to Libya. Items under all specific ECCNs continue to require a license.
• Libya is eligible to receive items under license exceptions TMP, GOV, GFT, TSU, RPL and AVS in limited circumstances.
• There is a somewhat favorable license review policy for exports of low-level computers, civil aircraft and parts, and certain other items t o non-military/police end-users.
• Jurisdiction for exports to Libya is transferred from the Office of Foreign Assets Control to the Bureau of Industry and Security (BIS). (BIS already had jurisdiction over reexports to Libya.
• OFAC dropped its rules that prohibit US persons from being involved in transactions involving Libya. US persons may now enter into new transactions with Libya without OFAC restrictions. OFAC continues to prohibit:
  • US persons involvement in Libyan property and property blocked by US person prior to April 23, 2004; and
  • Certain travel-related activities including carriers of the United States and Libya flying to Libya and the United States, respectively.
• The 10% de minimis level for foreign-made items with US content remains unchanged.
• If you have an OFAC license for Libya, you may continue to use it through its expiration date (May 1, 2005 if the license has no expiration date).

SYRIA

• Everything except food and medicine require a license for Syria-that is, items classified as EAR99 now require a license for export or reexport to Syria. All items that formerly required a license for Syria still require a license.
• BIS revoked all licenses that BIS issued for Syria prior to May 14, 2004.
• The new restrictions (above) do not apply to any items en route to Syria on May 14, 2004 as long as the items are exported or reexported by May 28, 2004.
• You may not use license exceptions for Syria except as follows:
  • TMP only for news media
  • GOV only for US Government
  • TUS only for operation tech data/software, sales tech data, and software updates
  • BAG only in limited cases for personally owned baggage
  • AVS only for temporary sojourn of aircraft reexported to Syria
• BIS policy is to deny all license applications for Syria. Exceptions might be made for deemed exports/reexports, items to support US Government or United Nations activities; medicines and medical devices on the Commerce Control List; aircraft parts to ensure safety of civil aviation; telecomm equipment and associated computers, software and tech data.
• The 10% de minimis level for foreign-made items with US content remains unchanged.
• OFAC did not impose any restrictions on US persons dealing with Syria.

When Did These Changes Happen?

The primary Libya change was announced in a BIS Federal Register notice on April 29 and a general license OFAC announced on its web site on April 23. The Syria change was announced in a May 14, 2004 Federal Register notice.

Why Did the United States Change Its Policies?

Several factors led the United States to significantly relax its controls on Libya: 1) Libya exposed the widespread illicit international nuclear weapons proliferation network and thereby did as much to thwart the future spread of nuclear weapons as any export control regime could ever hope to accomplish; 2) Libya promised that it has ended its weapons of mass destruction program; and 3) Libya accepted a certain responsibility for the bombing of the commercial aircraft over Lockerbie, Scotland and agreed to pay $10 million to the families of the victims.

(Interestingly, a couple of weeks after the United States ended its trade embargo on Libya, Libyan President Gadhafi announced that Libya will halt its military trade with North Korea, Syria and Iran. The White House said that Libya’s actions “have made our country and the world safer.” We have calculated that if the current rate of increasing cooperation and trade policy coordination continues at this pace, by June 17, 2006 Libya will share the same status as Canada under US trade controls!)

As for Syria, the Bush Administration was pressured to impose more trade restrictions on Syria when Congress passed the Syria Accountability and Lebanese Sovereignty Act of 2003. Congress passed the law to punish Syria for its support of international terrorism.

In the December 10, 2003 Federal Register the Commerce Department published a wide range of changes to the Commerce Control List.  The majority of these changes implement the December 2002 agreement by the members of the Wassenaar Arrangement.

Read More

Do your sales reps keep bugging you with Iraq opportunities? Are you confused by the multiple Iraq Federal Register Notices in May talking about this General License or that? Well, so are many, including those answering the Q&A phone bank at the Office of Foreign Assets Control (OFAC). Here’s the current deal on Iraq: the embargo has been lifted. Items classified as EAR99, as well as those classified in most AT controlled Export Control Classification Numbers (ECCNs) no longer require export or reexport licenses to Iraq.

How did this happen? When the Iraq war began to wind down, the administration began feverishly trying to undo the embargo. But years of layered laws and rules are difficult to unravel, and so the process is occurring in steps. The UN also had to lift their sanctions. For the past few months, OFAC and the Bureau of Industry and Security (BIS) have attempted to untangle the mess through a series of website announcements and regulations changes. The most important step thus far was the General License issued by OFAC on May 23 that effectively lifted the embargo.

Read More

On September 23, 2002 the Commerce Department and State Department published notices in the Federal Register revising their respective export control regulations as the relate to jurisdiction and export licensing requirements for “space qualified” items. These agencies and the Department of Defense have been debating and negotiating whether these items should be on the US Munitions List (USML) or the Commerce Control List (CCL) for several years. (See our July 2000 and August 2001 newsletters.) As a result of these new regulations certain items move from the CCL to the USML, certain move from the USML, and certain stay where they are.

Instead of going through all of the details of the two Federal Register notices, here is a quick summary of what happened:

Highlights of Items Moved from the CCL to the USML

Space qualified’ atomic frequency standards (formerly ECCN 3A002.g.2)

Solid state detectors (formerly ECCN 6A002.a.1)

Imaging sensors (formerly ECCN 6A002.b.2.b.1)

Cryocoolers (formerly ECCN 6A002.d.1)

Optical systems parts (formerly ECCN 6A004.c)

Optical control equipment (formerly ECCN 6A004.d.1)

The State Department announced that that it will “resume responding” to requests for Commodity Jurisdiction (CJ) determinations for certain items. This is the State Department’s way of saying that if you send a CJ request for the following items, there is a good chance that you will eventually get a ruling that they are on the CCL:

(1) Space qualified travelling wave tubes (also known as helix tubes or TWTs), microwave solid state amplifiers, microwave assemblies, and travelling wave tube amplifiers operating at frequencies equal to or less than 31GHz.

(2) Space qualified photovoltaic arrays having silicon cells or having single, dual, triple junction solar cells that have gallium arsenide as one of the junctions.

(3) Space qualified tape recorders.

(4) Atomic frequency standards that are not space qualified.

(5) Space qualified data recorders.

(6) Space qualified telecommunications systems, equipment, and components not designed or modified for satellite uses.

(7) Technology required for the development or production of telecommunications equipment specifically designed for non-satellite uses.

(8) Space qualified focal plane arrays having more than 2048 elements per array and having a peak response in the wavelength range exceeding 300nm but not exceeding 900nm.

(9) Space qualified laser radar or Light Detection and Ranging (LIDAR) equipment.

In the January 3, 2002 Federal Register the Commerce Department published a wide range of changes to the Commerce Control List (CCL). These revisions to the CCL implement changes agreed by the Wassenaar Arrangement, an 30+ country agreement on multilateral export controls. The changes effect all of the CCL Categories except 0 and 8. The changes include clarifications of existing controls and substantive changes to the existing controls.

The following is a quick rundown of the highlights of the changes most likely to impact aerospace companies. You should review the specific changes for yourself to see how they actually impact the controls on your hardware, software and technical data.

• Category 2: Revisions to controls on bearings, machine tools, machine tool software, and coating technology (2E003).
• Category 3: Assorted clarifications, extensive changes to controls on electronic components (3A001), added controls on silicon carbide,.
• Category 5: Removed controls on software for recovering source code of certain telecomm software.
• Category 6: Assorted clarifications, revised controls on instrumentation cameras and lasers and certain software.
• Category 7: Revised 7A001 to apply to linear accelerometers and 7A002 to apply to angular or rotational a accelerometers.
• Category 9: Assorted clarifications and removed controls on overhaul technology for gas turbine engines (9E003.a).

In the December 18, 2001 Federal Register the he Office of Defense Trade Controls (ODTC) in the State Department has announced a new license review policy for Indonesia. Under the new policy, ODTC will review license/agreement request for the following on a case-by-case basis.

• Non-lethal defense articles and spare parts
• Non-lethal, safety-of-use spare parts for lethal end items.

ODTC said that examples of safety-of-use spares for lethal end items would include cartridge actuated devices, propellant actuated devices, and technical manuals for military aircraft for purposes of enhancing the safety of the aircraft crew.

ODTC defines “non-lethal defense articles” as “an article that is not a weapon, ammunition or other equipment or material that is designed to inflict serious bodily harm of death.”

In October 1999, ODTC suspended all licenses and approvals for Indonesia except for certain commercial communication satellites and Y2K activities not destined for the military in response to the unrest in the country. ODTC relaxed this policy twice in 2001: In January it announced a policy of case-by-case review for spare parts for C-130 aircraft and in March it announced a case-by-case review policy for items exported to Indonesia for ultimate end-use in a third country.

By implementing a “case-by-case review” policy, ODTC is saying that it will not automatically deny licenses, but will review them on their merits.

ODTC gave no reason for relaxing its Indonesia policy, but we suspect the new policy is a reward for Indonesia’s cooperation in the aftermath of the September 11 attack-a reward we predicted in our newsletter in September.

The departments of State and Commerce announced on their respective web pages that they have reached agreement on the export licensing jurisdiction of space qualified items. State and Commerce have been discussing/arguing the jurisdiction of these space qualified items for over two years. (See our July 2000 newsletter.) The items include traveling wave tubes, photovoltaic arrays, sophisticated tape recorders, atomic frequency standards, sophisticated data recorders, telecommunications equipment for use on satellites and the related development technology, solid state optical detectors, imaging sensors, cryocoolers, focal plane arrays and the technology to make them, optical systems parts, optical control equipment, laser radar.For more details see http://www.bxa.doc.gov/Licensing/SpaceQualifiedDetermination083101.html.

In the waning days of the Clinton administration, Bill Reinsch, under secretary of the Bureau of Export Administration (BXA), mounted an aggressive push to settle lingering interagency disputes over the appropriate control jurisdiction for “space-qualified” satellite components and night vision technology. BXA had been battling with the State Department’s Office of Defense Trade Controls (ODTC) for more than a year on 16 space-qualified items and for about six months on 30-odd night vision items.The tug-of-war between BXA and ODTC over the items grew so heated that the White House’s National Security Council intervened to settle the matter. But even though the Clinton NSC examined competing jurisdiction claims over several months, it turned out the lights on Jan. 19 without so much as ruling on a single disputed item.

Reinsch, however, reported at a March 6 exporters’ meeting that the leftover export control disputes from the Clinton years haven’t slipped to the bottom of the Bush NSC’s docket. “The NSC doesn’t regard these things as off the screen,” said Reinsch, who is staying in his under secretary post until the Bush nominee, Kenneth Juster, is confirmed. “The wheels are moving.”

One of the challenges over the past year was to get all concerned agencies-BXA, ODTC, and the Defense Department-to draft and submit their positions on all space-qualified and night vision items in the commodity jurisdiction battle. It took the Clinton NSC almost a year to compile all the position papers, but the file is now complete. “Not a lot more work needs to be done,” said Reinsch.

By Erik Wemple, Editor, The Export Practitioner