Export Controls Impacting U.S. Satellite Sales

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Export Controls Impacting U.S. Satellite Sales

The aerospace industry claims that it is losing business to European competitors because of the slow processing of license applications by the U.S. State Department. The Aerospace Industry Association (AIA) asserts U.S. satellite sales have dropped 40 percent since the transfer of regulatory control to the U.S. State Department, without any sales impact on China. Data compiled by the Satellite Industry Association (SIA) shows that in 1997, when satellite exports were regulated by the U.S. Department of Commerce, U.S. companies won 76 percent of all orders for geostationary-orbiting telecommunication satellites, with the remaining business going to European companies. In 1998, U.S. companies still retained 73 percent market share, but in 1999 U.S. manufacturers only won 12 of 23 commercial satellite orders placed, with market share dropping to 52 percent. William J. Lowell, director of the State Department's Office of Defense Trade Controls, said he thought 16 major commercial satellite sales were licensed by his office in the past year.

The U.S. Congress transferred authority over export licensing from the U.S. Commerce Department to the U.S. State Department in March of 1999, requiring all technology deemed sensitive by the United States government to be licensed by the U.S. State Department. Sixteen nations have written to the U.S. Secretary of State saying that they are "no longer going to buy any satellite parts at all from the United States because [they could not] get the parts at all from the United States in time."

EarthWatch, which applied for a license for its next generation of remote sensing satellites in December 1998, has yet to be granted one, to allow the company to begin construction of the satellites. "If we are late on our next generation, we�re in trouble," Herb Satterlee, EarthWatch CEO, said. "The first thing Wall Street asks us is �Do you have your licenses?� They won�t give us the money we need if we don�t." The government claims it realizes the problems with delaying the granting of licenses and is trying to address industry concerns.

In the fall of 1999, the Senate Banking Committee passed a new Export Administration Act that calls for a significant increase in penalties for companies that violate export laws while placing the U.S. Commerce and Defense Departments back in control of export licensing. Sen. Phil Gramm (R-Texas), who chairs the Banking Committee, has not yet been able to get the measure to the Senate floor for a vote. The legislation may be heading for a vote soon, so it is believed by some within the aerospace industry that the State Department may be using their recent allegations against Lockheed Martin as an attempt to sway support back to their side.

This dispute is the latest in an exchange between conservatives claiming they are defending national security interests and an industry fighting to compete with fast-paced technological advances.

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April 10, 2000

Andrews Space & Technology