U.S. said losing space markets, hobbled by own policy

By Jim Wolf

WASHINGTON (Reuters) - Even as the United States plans a high-profile shoot-down of a wayward satellite, a new report shows Russia, China and others are gaining space market share -- aided by a U.S. policy that some say has misfired.

Far from blocking the rise of foreign space capabilities, U.S. export controls tightened nearly 10 years ago had the opposite effect in some cases, an expert panel drawn largely from industry said in a study released on Tuesday.

"The grand strategic intent of the space export controls is not being achieved," said the report put out by the Center for Strategic and International Studies, a Washington research group.

The report did not address the coming U.S. effort to shoot down a disabled spy satellite for the first time before it tumbles from orbit -- an operation that could take place as soon as Thursday.

National security officials have said the planned shoot-down, using an anti-ballistic missile interceptor from a ship in the Pacific, is designed to protect populated areas from space debris and toxic fuel, not showcase an expanding U.S. missile-defense shield with space-based sensors.

The United States tightened space technology-transfer rules in 1999 after congressional investigators found China had acquired sensitive technologies from U.S.-built commercial satellites then being launched by the Chinese.

The new rules put commercial communications satellites, subsystems and components on a munitions list subject to State Department licensing even if similar products could be easily bought worldwide.

The U.S. State Department had no immediate comment on the report.

In the global communications satellite market -- where the United States enjoyed a technical edge over international competitors in the 1990s -- the gap with competitors has "significantly closed" in the last decade, the report said.

The U.S. share of global space markets is steadily declining and U.S. companies are increasingly hard-put to cash in on foreign markets, it said. "U.S. preeminence in space is under challenge in many areas."

The export-control regime is designed to enhance U.S. national security but "did not do what it intended," said Pierre Chao, one of the study's three co-chairs, at a briefing on the findings. "In some cases, it had the opposite effect."

For instance, Russia was sharing relevant know-how with China, Europe and India even as the United States had shied from doing so, the report said.

The study said the overall financial health of the top manufacturers in the U.S. space industrial -- by implication, companies like Lockheed Martin Corp, Boeing Co and Northrop Grumman Corp -- was "good," despite the U.S. industry's loss of share overseas.

But it said U.S. access to foreign innovation and "human capital" was getting tougher. The U.S. space industrial base is largely dependent on U.S. national-security spending, it added.

The study found space-faring nations were continuing to make strides even without access to U.S. technology that once made the United States part of a "very exclusive club."

For instance, Russia, France, Israel, South Korea and India all now possess commercial imaging satellites sharp enough to pick out objects on the ground one meter (one yard) long or less, the report said.

In addition, Canada, the European Space Agency, Italy, Germany and Japan each possess civil radar imaging satellites, with India and Argentina soon to join the list, it said.

Since 1999, China, for its part, has launched an indigenous navigation system, conducted its first manned spaceflight, tested an anti-satellite missile, sold the first Chinese-built satellite to a foreign buyer (Nigeria) and launched its first lunar probe. China also has launched two military radar imaging satellites, the report said.

Jeffrey Foust, a space and telecommunications expert at Futron Corp, a Bethesda, Maryland consultancy, said U.S. policy had backfired in space.

"The U.S. is actually hurting national security by making it more difficult for the space companies it depends on to compete in the global market," he said.

(Reporting by Jim Wolf; Editing by Tim Dobbyn)