Pentagon seeks to loosen some export restrictions

COLORADO SPRINGS, Colo. Wed Apr 18, 2012 5:03pm EDT

A United States Marine stands by his post in front of the Pentagon in Washington February 29, 2012. REUTERS/Gary Cameron

A United States Marine stands by his post in front of the Pentagon in Washington February 29, 2012.

Credit: Reuters/Gary Cameron

COLORADO SPRINGS, Colo. (Reuters) - A Pentagon report on Wednesday recommended loosening U.S. export controls on "hundreds of thousands" of items used to build communications satellites and remote sensing equipment, while maintaining or tightening controls on exports to China, Iran and other countries.

Greg Schulte, deputy assistant secretary of defense for space policy, said the changes, if approved by Congress, would help make U.S. industry more competitive internationally at a time when defense budgets are declining.

"There are hundreds of thousands of items that we think can move off the U.S. munitions list, allowing U.S. industry to compete more effectively globally in those areas," Schulte told a news conference at a space conference in Colorado.

"The strength of our industrial base is important to sustaining and advancing the strategic advantage we get from space," he said, underscoring that the report was prepared jointly by the Defense, State and Commerce departments.

The U.S. Munitions List is a list of articles, technologies and services deemed defense- and space-related by the U.S. government. Any item on the list requires a license issued by the U.S. government in order to be exported.

The Pentagon report comes as U.S. satellite makers and launchers, already dealing with cuts in funding for NASA programs, brace for cuts to national security satellite programs.

To implement the changes, the report recommended that Congress restore the president's authority to determine export controls on the satellite industry. Lawmakers revoked that power in 1999 after two U.S. companies were found to have provided unlicensed aid to China's space launch business.

SENSITIVE TECHNOLOGIES

The report was welcomed by satellite industry executives, but it sparked concern among some lawmakers worried that sensitive U.S. technologies would wind up in the wrong hands.

The Satellite Industry Association applauded the depth of the report but said it was still reviewing its detailed recommendations.

The report lists the satellites and associated parts and components that can be removed from the U.S. Munitions Control list, overseen by the State Department and moved to the less cumbersome Commerce Control List with acceptable risk.

It said years of more stringent export control policies and practices had put the U.S. satellite industry at a "a distinct, competitive disadvantage that undermines the U.S. space industrial base" compared with other countries.

Schulte said the report recommended maintaining a ban on any U.S. satellites being launched by Chinese rockets, and put tighter controls on exports of satellites or components to China and other countries including Iran, North Korea and Syria.

"We have truly identified our crown jewels and those are the things that we want to put the fences around," Lou Ann McFadden, chief of the strategic issues division of the Defense Technology Security Administration, told the news conference.

She said the level of consensus achieved among the Pentagon, State and Commerce departments was unprecedented.

Congress would need to pass legislation to allow the administration to change the way satellite exports have been regulated since 1999. One bill has already been introduced in the House of Representatives, and a similar measure is expected to be introduced in the Senate later this month.

U.S. Senator Michael Bennet, a Colorado Democrat, welcomed the report and said he planned to introduce legislation in the Senate that would pave the way for the changes to take effect.

"Our satellite businesses continue to lose market share at an alarming rate," he said in a statement.

But Representative Mike Turner, a top Republican on the House Armed Services Committee, criticized the report's recommendation to give the president control over satellite export controls.

"The administration's request for blanket authority to relax our export control regime over thousands of space technologies would not make this country safer, or further our goals," he said, citing years of delays in enforcing the current rules.

(Reporting By Andrea Shalal-Esa; Editing by Gerald E. McCormick and Matthew Lewis)

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