Tuesday, October 06, 2009

ITAR, Dual Use and Export Restrictions

The recent announcement that US President Barack Obama has directed his economic and national security advisers to launch a broad-based inter-agency review of U.S. export controls governing military and dual-use technology transfers (according to the article "White House Announced Export Control Review" from the Space News website) cannot help but remind us that no discussion of Canadian space policy is complete without referencing the various US export control regulations and their effects.

Examples of these regulations include the International Traffic in Arms Regulations (ITAR) and the recent International Emergency Economic Powers Enhancement Act.

As a reminder of why the the Obama administration feels the need to perform a review, we might want to take a look at recent promotional documents like "Coping With The New Export Control Paradigm" published by large American law firm Foley and Lardner LLP (which likely wrote the document to highlight it's expertise in this area). High points include the following statements:
Export compliance for technology requires a different mindset, with the focus as much on the process of creation and the use of the product as the good itself. For example, where software is at issue, the focus is not the physical medium but rather such issues as the method of export (which could be over the internet and thus not involve any good in traditional form) and the potential uses of the software (which might be incorporated into a controlled product by the purchaser). 

Technology also brings into play nontraditional means of export. Such issues as whether there is a “deemed export” (i.e., communication of controlled information to a non-U.S. national, whether by oral discussion, visual inspection, or otherwise), export by access to a company’s information systems, issues relating to the employment of non-U.S. nationals, or even whether the mere exposure of a foreigner to a “data-rich environment” is a violation are all amplified where highly technological goods and services are at issue.
These issues all relate to the potential "dual" or second use of any item as a weapon. Since almost anything can be used as a weapon (even a pen, which was traditionally considered to be mightier than the sword) the US perceives it reasonable to implement and maintain these sorts of sweeping regulations governing possibilities and potentialities.

Of course, many Canadian companies are therefore having difficulties selling into the lucrative US aerospace and defense market but these restrictions also limit trade in the other direction. For example, the article "Allies Rebel Against U.S. Military Trade Restrictions" states unequivocally that:

EADS and other European companies have been working to develop military components that are not subject to a U.S. sales veto. For example, EADS Space Transportation Division boasts it is developing a satellite motor that will be “completely ITAR-free and therefore not subject to U.S. export license restrictions, allowing competitive access to worldwide customers.”

EADS is following in the footsteps of France’s Alcatel Space, which has made it company policy since 2002 to build ITAR-free communications satellites to avoid U.S. control over sales. Last April, Alcatel launched its first ITAR-free satellite on a Chinese rocket.

Morotta, a British maker of spacecraft propulsion and propellant management equipment, advertises that its products “are European and hold ITAR-free status.” And when Surrey Satellite Technology, another British firm, touts the “features” of its satellite propulsion systems, “completely ITAR- free” is at the top of the list.

This is bad news for the U.S. satellite industry, according to a paper published by the American Academy of Arts and Sciences. U.S. companies, which must adhere to ITAR restrictions, are at a growing disadvantage as the inventory of ITAR-free components expands.
No one in Canada is so far suggesting that perhaps we should be doing the same but lets hope the Obama requested review at least begins to start putting the US house in order.

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