The legislative reversal was prompted in part by revelations over the summer that two U.S. space firms—Loral Space & Communications and Hughes Electronics—may have provided unauthorized assistance to China in the reconstruction and analysis of a failed satellite launch. (See ACT, May 1998.) Although the Loral-Hughes incident occurred before the transfer of commercial satellite exports to the Commerce Department, critics of the administration's engagement policy with China have used the satellite export issue to attack the administration as being soft on China. Critics contend that U.S. involvement in China's commercial space sector benefits Beijing's military space and missile development efforts.
The effect of the new law, which reclassifies commercial satellites as Munitions List items rather than dual-use items, will be felt chiefly by domestic space firms accustomed to the Commerce Department's faster, more business-friendly review process. Commerce reviews of dual-use items consider economic and trade interests as well as U.S. national security concerns, proceed on the basis of published regulations and have a 90-day timeline for action. State Department reviews of Munitions List items primarily consider the proposed sale's effect on national security and foreign policy, are open ended and tend to take longer since State assigns fewer people to the process.
The shift in satellite jurisdiction marks the second time that Congress has used the annual defense spending bill to roll back a liberalization by the Clinton administration of U.S. high-tech export controls. In 1998, Congress tightened controls on exports of high-performance computers, which the Clinton administration had eased in 1996, following the discovery of U.S. supercomputers in Russian and Chinese military labs.
Although Commerce Department officials had warned of a presidential veto of the defense bill over the satellite issue, the White House chose to accept the bill after a House-Senate conference committee weakened the satellite provisions. Initially, for example, the House wanted to ban all satellite exports to China. The new legislation, however, only requires the president to certify, 15 days before a commercial satellite export is made to China, that the sale will neither hurt the U.S. space launch industry nor "measurably improve the missile or space launch capabilities" of China.
In a statement accompanying his signature of the legislation, President Clinton objected that the change in jurisdiction for satellite export controls "is not necessary… and could hamper the U.S. satellite industry." Referring to the effective date of March 15, 1999, for the transfer of export control authority, the president urged the Congress to pass "remedial legislation" before the change in jurisdiction is made effective.