San Diego Union-Tribune

C-1

07-Feb-2001 Wednesday 

U.S. satellite firms vexed by export law 

OTTO KREISHER 
COPLEY NEWS SERVICE 

WASHINGTON -- The commercial satellite industry in California last year lost $2.1 billion in sales and about 1,000 jobs because of new export restrictions and increasing foreign competition, a state-funded survey
concluded yesterday.

The year after Congress imposed tighter rules to control material and information that could affect national security, U.S. satellite makers' share of the global commercial market declined from an average of 75
percent to 45 percent, the report said.

It is the first time the United States had less than half of the world market since 1987, the year after the Shuttle Challenger disaster, noted the report released by the Satellite Industry Association. The study was funded by the California Trade and Commerce Agency.

California is home to four of the world's six largest commercial satellite makers. Those firms, subcontractors and research organizations provide more than 25,000 jobs in the state, a large share of which are in Los Angeles
and San Diego counties.

"The study shows that the U.S. commercial satellite manufacturing industry is in serious danger of losing its leadership position in the global marketplace," said Clayton Mowry, executive director of the satellite
association. Mowry presented the study's findings to representatives of the space industry and California universities, seven California members of
Congress and aides to other lawmakers.

Mowry conceded that the American space industry faces mounting foreign competition, primarily from European organizations whose services have become better and cheaper with consolidation and government support.

But he said the major factor in last year's plunge in U.S. sales was the law tightening restrictions on exporting information and material that could have both military and civilian use. The legislation shifted export licensing for commercial satellites from Commerce to the State Department.

The law was enacted after it was disclosed that two U.S. satellite makers might have helped China improve its space launch capabilities in an effort to stop a series of launch failures that destroyed expensive U.S. spacecraft. That aid also might have helped China improve its nuclear-armed ballistic missiles.

The law was supported by most of California's Republican House members and some of the Democrats because of concerns over China's growing military and economic strength.

Industry officials surveyed said the law was plagued by ambiguous definitions and rules, brought a 400-percent increase in paperwork, sharply restricted essential communications between manufacturers and their
customers and suppliers, and slowed export approval, Mowry said. The cumulative effect was to make U.S. producers less reliable, he said.

As an example of the problems with the law, Mowry said a commercial satellite built and launched in California for a California communications provider would require a State Department export license. That is because most satellite launch insurance comes from European underwriters, who
demand technical data on the launch. Such information is covered by the law.

To reduce the obstacles to exports, the satellite association recommended more funds to the State Department to speed up its licensing process,
support for a recent initiative to ease exports of commercially available products and treating commercial satellites as telecommunications equipment instead of armaments.

The proposals drew support from several of the California lawmakers at the breakfast session, including Rep. Jane Harman, D-Rolling Hills.

Rep. Dana Rohrabacher, R-Huntington Beach, appeared less sympathetic to softening the rules he had championed. He warned that nothing should be
done to help China, which he called a potential adversary.