13 June 2000
Source:
http://usinfo.state.gov/cgi-bin/washfile/display.pl?p=/products/washfile/latest&f=00060801.clt&t=/products/washfile/newsitem.shtml
US Department of State
International Information Programs
Washington File
_________________________________
08 June 2000
(Divisions in both administration, Congress apparent) (880) By Bruce Odessey Washington File Staff Writer Washington -- The issue of who should control satellite exports continues to divide the Clinton administration and Congress, a congressional hearing demonstrated. At a June 7 Senate Foreign Relations subcommittee hearing, muted but clear differences emerged between the Commerce Department -- which wants to regain jurisdiction over satellite export controls from the State Department -- on one side and the State and Defense departments on the other side. The issue resurfaces now when the U.S. share of the world satellite market has dropped sharply, a development that Commerce Department officials assert hurts an industry critical to U.S. national security. In Congress some House members have introduced legislation for transferring jurisdiction back to Commerce. Others, meanwhile, are reportedly considering attempts to block recent State-Defense reforms making satellite exports to NATO and other allies somewhat easier. At issue is a provision of a 1999 defense authorization law that transferred jurisdiction over satellite export controls from Commerce back to State. President Clinton signed that bill stating misgivings about that provision. Congress acted after allegations of illegal satellite or space launch technology transfers to China that were tied to satellites exported for launch in that country. Those cases remain under investigation. The Commerce Department treated satellites as commercial products, requiring no export license at all for many components. Congress required satellite exports be treated as munitions, subject to intense scrutiny for national security reasons. After years without controls in Commerce, satellite components became re-controlled in State. "Since the transfer, which this administration opposed, as you know, satellite exports have declined 40 percent," Commerce Under Secretary William Reinsch testified. "The satellite industry has told us that the U.S. share of the world market has dropped from 73 percent in 1998 to 62 percent in 1999, to 52 percent for the last three quarters." Reinsch argued that the unilateral U.S. decision considering satellites as arms instead of commercial products effectively shuts U.S. advanced technology companies out of important global markets -- harming those companies on which national security increasingly depends. While U.S. exporters still enjoy a cost advantage, he said, they are losing the advantage of timeliness and predictability in delivering on sales because of State's export controls. "Only the U.S. treats these sales as arms exports," Reinsch said. "The obvious response for manufacturers is to avoid using U.S. parts and components, and we have seen a trend to 'design out' U.S. satellite components that poses grave risks to our industry." Officials from the State and Defense departments joined with Reinsch in stating that their agencies neither wanted nor welcomed the 1999 change in jurisdiction, but only Reinsch spoke forcefully in favor of transferring jurisdiction back to Commerce. He said the Clinton administration has taken no position on the bill, introduced just in May, that would accomplish such a transfer. John Holum, State Department senior adviser for arms control, testified in agreement with Reinsch that satellites and most of their components are objectively commercial items, not arms as Congress has decided. He agreed that re-control of components poses export problems. But he and James Bodner, principal under secretary of defense, departed from Reinsch's testimony on other points. "I'd like ... to caution against exaggerating the impact of these problems in terms of lost sales and market share for the U.S. satellite industry," Holum said. He and Bodner argued that the drop in the U.S. market share should not be attributed only to export controls. They said that excess global capacity accompanied by non-competitive bids in the European Union (EU) are to blame as well. And they both defended improvements made in State's export-control system in the 15 months that State has had jurisdiction. They reported, for example, that State has reduced average export license processing time from 98 days in mid-1999 to 70 days now for a satellite-related case requiring inter-agency review. They also promoted new regulations, effective July 1, that they said should make somewhat easier U.S. exports of satellites and related components and technical data to NATO and other major allies, in part through use of bulk licensing arrangements. Reinsch described the regulations as largely ineffective, however. "It's like putting lipstick on a dying pig," Reinsch said. "You know, it makes it look better, but it doesn't solve the fundamental problem. The fundamental problem is that it doesn't belong over there [in State] ... and there's limits to what they can do." Bodner testified that the Defense Department can work with either State or Commerce jurisdiction over satellite exports but made clear that Defense is not requesting another transfer in jurisdiction. He praised certain parts of the 1999 law such as improved monitoring of satellite exports. The Defense Department was more comfortable with the access it has in State's export-control system compared with that in Commerce, he added. Bodner opposed, however, any attempts in Congress to block the 17-point special regulatory regime just announced for NATO and other U.S. allies. "I do think there are some people considering legislation to block those 17 reforms," he said. (The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)