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It's Not Just A Bad Idea, It's The Law

There's a long piece on the the current state of space law over at the ABA Journal. I only have a couple issues with it. First, I don't know what they mean by this:

Even though the United States eventually outpaced the Soviet Union by putting men on the moon in 1969, the space race continued until the early 1990s.

No, the space race was essentially over by 1968 or so, once the Russians realized that they weren't going to beat us to the moon, and instead rewrote history to pretend that they'd never even been trying. There was no urgency or racing after that--had there been, NASA budgets would have been higher, and schedules faster. So I don't know what this sentence means, unless it just a vague reference to the fact that progress, such as it was, continue on both the US and Soviet side, until the fall of the Soviet Union.

On ITAR, I strongly disagree with Pam Meridith:

"I think the hysteria over ITARs is out of proportion," says Pamela L. Meredith, who co-chairs the space law practice group at Zuckert, Scoutt & RasenĀ­berger in Washington, D.C. "They've been around for a long time now, so people have had time to adjust."

No matter how much "time people have to adjust," it still adds time and cost to projects, and prevents many from happening altogether. And it has a disproportionate effect--like most regulations, big space businesses (who despite leftist mythology, are no fans of capitalism or free enterprise) don't necessarily dislike ITAR, because they can afford to meet the requirements, and they represent a barrier to entry to smaller businesses and newcomers, who generally can't. (Though there's also no question that it's cost Boeing a lot of satellite business.) And as a perfect case in point, consider Mike Gold at Bigelow (in a long, but quite interesting interview):

Res Communis: Can you comment on a company's cost of implementing ITAR?

Gold: Yes, absolutely. Paying so much for export control is a bit like being asked not just to dig your own grave, but to jump in it as well. Our best estimates are that we pay roughly $130.00 per hour, per person, for every hour that a government official monitors us or reviews our documentation during the day, plus overtime, which can add up on overseas trips. What amazes me is that when we travel to Russia for meetings, we sometimes travel with not one, but two government officials, monitoring every word we say. Then, across the table from us are the Russians, all great folks, who came out of a Communist system, and they have no explicit monitors. If we were to have brought someone down from Mars to attend our meetings, and asked them which of these two nations represented the free country, the Martian would point to the Russians. The U.S. holds itself out as the bastion of freedom. But when I am sitting there at those meetings I have to wonder: which is the free country? Now again, this is a problem of policy not personnel. The monitors we get are often good, smart people, who can even be quite helpful at times. However, what I want is for these monitors to be able to spend their limited time and resources focusing on military sensitive technologies that really matter rather than wasting their efforts on us. The Russians basically do this. They have the unique policy of protecting information that is actually sensitive. They don't care about metal coffee tables. It makes a lot more sense. And, in regard to the financial costs, you know, the KGB may have spied on you back in the Soviet days, but at least they had the courtesy to do it for free. It is unfathomable to me what we have to pay for export control review and monitoring.

Res Communis: You do cover their travel expenses also?

Gold: Absolutely, including airfare and hotel. Specifically, in 2006, the year of the Genesis I campaign, we paid over $160,000 in monitoring fees alone. In 2007, when the Genesis II launch campaign took place, we paid the government nearly $150,000 for monitoring and reviews. Thanks to Mr. Bigelow's generosity and commitment, we're able to afford such fees, but there are a lot of small companies that can't. This is why the ITAR has stifled innovation and stunted development in the American aerospace sector. The ITAR should be re-named "The Full Employment for European and Foreign Aerospace Workers Act."

Res Communis: As between a new space company like Bigelow and the big aerospace corporations, is the ITAR burden disproportionate for the new companies?

Gold: Everyone has problems with it, but a large, well established company is better able to absorb the expenses and can pass the cost on to their customers relatively easily. Anecdotally, I have spoken to a number of friends and colleagues at small aerospace businesses and start-ups. They tell me that they don't even look at international collaboration because they know they can't afford to work through the export control problems without a hoard of attorneys. Frankly, it took a lot of work and diligence and a little bit of luck on our own part to have been able to survive the ITAR gauntlet with just myself, my deputy, and some limited support from outside counsel.

And because Bigelow is wealthy, and willing to foot the bill, he can afford it. Most startups aren't in this position. This is just one of the many ways that federal policy has been disastrous, and continues to help bind us to the planet.



Dennis Wingo wrote:


What you are illustrating is the difference between a lawfirm that makes money from ITAR and a lawyer that works for a space company.

Rand Simberg wrote:

Good point. I'm sure that Pam loves ITAR--it's a gold mine for her.

Ray wrote:

I wonder what Gold will say at the Space and Telecom Law Conference at the University of Nebraska? He's on an ITAR discussion there tomorrow.

ITAR is expensive, but so is the cost of leaking the wrong information to where it should not go. We complain about the rate of sensitive information leakage (and material) from Russia into the hands of those who should not have it, yet we admire their lack of security when ours inconveniently gets in our way.

Face it, the cost of protecting sensitive information is high and always will be. The United States happens to have a lot of sensitive information to protected (consider that a good historical position to be in). Countries like, I don't know, New Zealand, don't have as many secrets as compared to the United States. I imagine their processes flow a little more smoothly (and cheaply) because of the that.

If you want project costs to go down, and business opportunities to go up, here in the United States then we should stop having so much sensitive information to protect. You could also move to New Zealand, but then you would have a hard time collaborating with various strategic suppliers here in the United States. No, you can't win but then the cost of maintaining control over information is high. (This is why, for instance, many Open Source Software jockeys simply want all "information to be free." The cost and the bother of information control is simply too high compared to the cost of the work they are doing, for free.)

Ivan Kirigin wrote:

I was at the Maker Faire yesterday.

Chris Anderson was showing off a guidance device built from a LEGO toolkit. It runs on his DIY UAVs that cost just a few hundred dollars.

The device is technically export restricted. But it's friggin LEGOs! The laws are ridiculous and need to adjust for the democratization of technology.

Lurking Observer wrote:


While there is obviously a need to keep some information classified, the question is whether the current ITAR structure is:

1. Successful; and
2. At a reasonable cost

When a set of regulations are either directly prohibiting, or being interpreted as prohibiting, sharing information with allies in collaborative ventures, I would suggest that there's something terribly wrong w/ the regulations.

Our own allies, such as the Brits and the Aussies, have made it clear that JSF collaboration is being retarded by ITAR regulations.

It's also been suggested that our own allies are developing a larger satellite industry, precisely in order to circumvent ITAR regulations---something which will likely hurt us in the longer run.

Nor is it clear the extent to which we need the level of ITAR regulations to limit Chinese ability to access our space information.

I don't think those suggesting an overhaul of ITAR are proposing eliminating export controls, regulations and restrictions entirely. I think they're asking for some greater care and rationality in the process.

Jeff C wrote:

Don' t forget one of the major reasons for the space export control clamp down. In the 1990's US manufacturers were far to lax in technology transfer, particularly to China. For business reasons, both Loral and Hughes provided info to China that helped improve the reliability of their boosters. Why? Cheap launches on the Long March and hopes of future Chinese business. There may have also a connection to Loral CEO Bernard Schwartz and the China - Clinton fundraising scandal that has never been fully probed.

The problem is that they also helped improve the reliability of the boosters currently sitting in Chinese silos targeted to cities near those same contractors facilities in San Jose and El Segundo. Chinese rockets blowing up on the launch pad was in our national interest, something these corporate titans couldn't quite comprehend.

ITAR needs reform, but don't forget why it is there.

Tom wrote:

Fair point, Jeff, but as with most government policies, it has been enacted well after the horses have left the barn.

Chinese technology is way ahead of where it was in the 1990s. China has done an industrial modernization nearly as impressive as Japan in the early 20th Century, and we are thus rapidly reaching a point of diminishing returns for ITAR.

At this point, I believe we are approching an effect like the mid-19th century British laws against exporting industrial technology to America--all it did was force American society to develop its own native industrial base, and one that rapidly overtook the UK.

It's similar to the effect of tariffs and import duties -- great for certain, selected big businesses, horrible for overall trade and the economy. The restrictor suffers more than the restrictee.

DensityDuck wrote:

Speaking as an employee of a Big Aerospace Corporation (Lockheed Space Systems), I'll point out that none of us like ITAR either. While we can pay the extra money, it's not as though we want to take dozens of millions of taxpayer dollars and spend them on useless, meaningless bureaucratic shit.

The people who really like ITAR are domestic US suppliers. People like ATK, who almost have a monopoly on US composite-structure production. People like L3, who have quietly bought almost every RF-hardware production shop in the nation. Everyone points to Microsoft and Wal-Mart as being these big horrible market-owning monopolies, but they don't realize that 95% of US satellites are BUILT BY ONLY ONE COMPANY.

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This page contains a single entry by Rand Simberg published on May 2, 2008 8:36 AM.

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