Exports of Commercial Communications Satellite Components, Systems, Parts, Accessories and Associated Technical Data

AGENCY:

Bureau of Political-Military Affairs, State.

ACTION:

Interim final rule.

SUMMARY:

Section 1309(a) of the Foreign Relations Authorization Act for Fiscal Years 2000 and 2001 requires the Department of State to establish a regulatory regime for the export licensing to U.S. allies of commercial satellites, technologies, components, and systems, which shall include expedited approval, as appropriate, while ensuring priority to national security and U.S. commitments under the Missile Technology Control Regime.

Section 1302(a) of the same Act requires the Department to promulgate regulations in order to ensure timely reporting to the Department (within 15 days of shipment or export) of all shipment information concerning items exported pursuant to section 38 of the Arms Export Control Act. The Department will phase-in the reporting requirements for shipment information during the remainder of Calendar Year 2000 through publication of a separate rule change. However, U.S. exporters wishing to take advantage of the special regulatory regime for satellite related licensing to U.S. allies established in this amendment will need to meet the reporting requirements of section 1302(a) in accordance and coincident with the effective date of this amendment or their initial license application submissions. In order to facilitate use of the special regime, the Office of Defense Trade Controls will make available free of charge to U.S. exporters the computer software and guidance for its use that are needed to participate fully.

This interim final rule amends the International Traffic in Arms Regulations (ITAR) by establishing a new regulatory regime for communications satellite related exports to U.S. allies.

EFFECTIVE DATE:

July 1, 2000.

FOR FURTHER INFORMATION CONTACT:

William Lowell or Terry Davis, Office of Defense Trade Controls, Department of State, Telephone (202) 663-2700 or FAX (202) 261-8264, ATTN: Regulatory Change, Commercial Communications Satellites.

SUPPLEMENTARY INFORMATION:

Section 1309(a) of the Foreign Relations Authorization Act for Fiscal Years 2000 and 2001 provides that the Secretary of State shall establish a regulatory regime for licensing the export of commercial satellites, satellite technologies, their components, and systems which shall include expedited approval, as appropriate, of the licensing for export by U.S. companies of such items to NATO allies and major non-NATO allies. Pursuant to § 1309(a) the regime should include expedited processing of requests for export authorizations that are time critical (including information exchange relating to satellite failures or anomalies); are required to submit bids to foreign persons for procurements; are related to re-export of unimproved materials, products, or data; or are required to obtain launch and on-orbit insurance.

Within this legislative framework, the Department of State (Office of Defense Trade Controls) and the Department of Defense (Defense Threat Reduction Agency/Technology Policy) convened in January 2000 a task force of U.S. aerospace industry experts who were members of the State Department's federal advisory committee for defense trade matters, the Defense Trade Advisory Group (DTAG). This DTAG task force met regularly with State and Defense in the period January-April 2000 for the purpose of setting forth a special licensing regime involving U.S. allies that would reflect experience gained since the transfer of commercial communications satellites to the U.S. Munitions List, which became effective March 15, 1999. This task force also drew on the technical and business expertise of other U.S. aerospace industry representatives in discrete product lines (particularly those involved in the supply of components and systems) and held a town hall discussion of the special licensing regime included herein at the April 2-4, 2000 Spring Conference of the Society for International Affairs, a non-profit association comprised of defense firms, held at Laguna Beach, California.

The ITAR amendment herein concerns the special satellite regime involving U.S. allies, provided for by authorizing legislation for exports and re-exports of U.S. Munitions List controlled articles for satellites to, within and among the territories of the member countries of NATO (Belgium, Canada, Czech Republic, Denmark, France, Germany, Greece, Hungary, Iceland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Spain, Turkey, United Kingdom and the United States) and countries that have been designated pursuant to the Foreign Assistance Act of 1961, as amended, as major non-NATO allies (Australia, New Zealand, Japan, Israel, Egypt, Jordan, Republic of Korea and Argentina). This coverage also includes exports and re-exports of U.S. Munitions List controlled articles for approved satellite projects to be launched from the United States or the territory of a NATO or major non-NATO ally. Importantly, unless otherwise specifically authorized at the time of license approval, this special satellite regime does not apply to any other country in any measure, including but not limited to intermediate consignment occurring during the initial export; temporary re-transfer or re-export; or launch into outer space of USML-controlled articles, whether or not incorporated (e.g., embedded) in a satellite when that activity involves a country that is not a member of NATO or a major non-NATO ally of the United States.

The special satellite regime has three principal features. The first is the ability to use high volume licenses (e.g., known in the trade as “bulk” licenses) for exports of specifically designed or modified components, parts, systems, accessories, attachments and certain associated technical data for commercial communications satellites under specified conditions for multiple shipments to any of the NATO or major non-NATO allies.

The second principal feature concerning use of this regime is that all eligible articles for export must be confined to an approved list of foreign aerospace firms located within the territories of U.S. allies for use in an approved list of commercial communications satellite programs of U.S. allies. The lists of foreign aerospace firms and commercial communications satellite programs included within the coverage of this regime will be kept under scrutiny by the U.S. Government and made publicly available on ODTC's Website and by other means. New firms and programs will be added to these lists following scrutiny within the U.S. Government (and approved for inclusion within the regime) in light of proposals from U.S. aerospace firms through export license applications.

Third, when exporting pursuant to the special regime, it is not necessary under specified conditions for U.S. exporters to provide in advance the details of purchase orders or contracts, or non transfer and end use certificates (e.g., form DSP-83) where they may be required. While all of this documentation will continue to be mandatory, and while exporters will continue to be required to ascertain the specific end users and end uses prior to export or re-export, the required documentation will only be required to be furnished to ODTC within 15 days following shipment from the United States (or re-transfer within the approved territory), at which time U.S. exporters will report the appropriate shipping information (discussed further below) and furnish the required documentation.

For sensitive components, such as MTCR-controlled items, the long standing controls of the ITAR, including non-transfer and end use certificates, parts control plans, and the like, will continue to be required. But, in most cases, such documentation may be furnished within 15 days of shipment, as described below. Restrictions may also be imposed on such licenses, however, in view of the specific items proposed for export as appropriate in furtherance of the security and foreign policy of the United States (e.g., to meet missile nonproliferation objectives). Further, for particularly sensitive articles or information, the U.S. Government retains the discretion to require a separate license when necessary in furtherance of the security and foreign policy of the United States.

The principal articles envisaged for the special regime are: (1) The supply of satellite components, parts, systems, attachments, accessories and associated technical data, including for off-shore procurement; and, (2) technical information needed to respond to bids, to requests for quotations, plant visits, acceptance testing of equipment and the like. Technical data for satellite insurance purposes, including for on-orbit anomalies, involving exports to insurance firms and their brokers and consultants located within the territories of U.S. allies has also been discussed extensively within DTAG and will be the subject of separate, informal guidelines not requiring an amendment to the ITAR.

Exports of complete commercial communications satellites for sale to, or launch by, U.S. allies have been proceeding expeditiously consistent with the Department of State's January 1999 report to Congress concerning implementation of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999. Such exports invariably involve contracts of $50 million or more, requiring notification to Congress pursuant to section 36(c) of the Arms Export Control Act before an export license may be issued. As such, these exports do not lend themselves to the special regime provided for herein and no rule change to that effect is being undertaken at this time. As suggested in the referenced report, the Department of State and the interested Committees of Congress have used all appropriate opportunities to ensure that U.S. aerospace companies are able to meet contract deadlines and launch schedules consistent with the security and foreign policy of the United States. The details of communications satellite notifications to Congress that have taken place since March 15, 1999, are available on the Website of the Office of Defense Trade Controls (HYPERLINK http://www.pmdtc.org.).

In carrying out this directive Part 123, Licenses for the Export of Defense Articles is being amended.

This amendment involves a foreign affairs function of the United States and therefore, is not subject to the procedures required by 5 U.S.C. 553 and 554. It is exempt from review under Executive Order 12866 but has been reviewed internally by the Department to ensure consistency with the purposes thereof. This rule does not require analysis under the Regulatory Flexibility Act or the Unfunded Mandates Reform Act. It has been found to be a minor rule within the meaning of the Small Business Regulatory Enforcement Act of 1966. It will not have substantial direct effects on the States, the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with § 6 of Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant application of Executive Order Nos. 12372 and 13123. However, interested parties are invited to submit written comments to the Department of State, Office of Defense Trade Controls, ATTN: Regulatory Change, Part 123—Commercial Communications Satellites Components, Systems, Parts, and Accessories, 13th Floor, Room H1304, SA-1, Washington, D.C. 20520-0113. Such persons must be so registered with the Department's Office of Defense Trade Controls (ODTC) pursuant to the registration requirements of § 38 of the Arms Export Control Act.

List of Subjects in 22 CFR Part 123

• Arms and munitions
• Exports

Accordingly, for the reasons set forth above, Title 22, Chapter I, Subchapter M, Part 123, is amended as follows:

PART 123—LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

1. The authority citation for Part 123 is revised to read as follows:

Authority: Secs. 2, 38, and 71, Pub.L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2753; E.O. 11958, 42 FR 4311; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 2658; Pub L. 105-261.

2. Section 123.27 is revised to read as follows: