International Traffic in Arms Regulations

International Traffic in Arms Regulations (ITAR) is a United States regulatory regime (dating back to the mid-1970s) to restrict and control the export of defense and military related technologies to safeguard U.S. national security and further U.S. foreign policy objectives. Before 1992, satellite components were classified as munitions, and ITAR export compliance was controlled by the State Department.

History of International Traffic in Arms Regulations

After the Space Shuttle Challenger disaster resulted in a growing backlog of commercial satellite launches, ITAR kept the Soviet Union out of the market. In September 1988, U.S. President Ronald Reagan agreed to allow U.S satellites to be launched on Chinese rockets.

After the failed launches of Apstar 2 (1995) and Intelsat 708 (1996), the satellite insurance companies required the satellite manufacturers to work with China to investigate the failures. The Commerce Department determined that the “export” of information as part of the failure analysis complied with the export license. In 1998, Congress reclassified satellite technology as a munition and returned it to the control of the State Department under ITAR.

International Traffic in Arms Regulations

The definition of an ITAR-controlled component has been extended over the years (especially since 1999, when the U.S. Department of State took over export regulations for satellites) to include anything that goes into outer space, no matter how inconsequential. Today, under U.S. export rules, even a space-qualified chocolate-chip cookie likely would be barred from export to China for the launch, if the chips were American-made. The U.S. government ITAR policy prohibits even the most banal U.S.-built widget from being launched aboard Chinese rockets.

With European governments now moving toward greater interaction with China’s space program, some European companies are developing hardware specifically labelled “ITAR-free”. Companies argue that ITAR is a significant trade barrier that acts as a substantial negative subsidy, weakening U.S. industries’ ability to compete. U.S. companies have pointed to announcements in Europe by Thales Alenia Space (TAS) promoting their “ITAR-free” telecommunication satellites. While satellite technology had been subjected to ITAR since 1999, the U.S. had seen its share of global satellite manufacturing halved with an estimated loss of twenty-one billion American dollars in revenue from 1999 to 2009.

The AECA and ITAR were enacted in 1976 during the Cold War with USSR and were intended to implement unilateral arms export controls that reflected those imposed on Eastern Bloc countries by the multilateral Coordinating Committee for Multilateral Export Controls. U.S. Government enforcement activities have increased dramatically since 1999, when the U.S. Department of State took over export regulations for satellites. ITAR’s impact of increased regulations also meant America’s worldwide market share in satellite technology declined from eighty-three percent to fifty percent in 2008.

ITAR (International Traffic in Arms Regulations) and the EAR (Export Administration Regulations) are export control regulations run by different departments of the U.S. Government. Both of them are designed to help ensure that defense related technology does not get into the wrong hands. An export license is a general term for both ITAR and EAR controlled items in which the U.S. Government has granted permission to transport or sell potentially dangerous items to foreign countries or parties.

The more stringent of the two sets of regulations was written for articles with direct defense-related applications. Articles specifically designed or otherwise intended for military end-use are enumerated on the United States Munitions List (USML) or the Missile Technology Control Regime (MTCR) Annex and therefore controlled by International Traffic in Arms Regulations (ITAR) which is administered by the Directorate of Defense Trade Controls (DDTC) at the State Department. Items, services, and information are all covered by the ITAR regulations. The most controlled items are Significant Military Equipment (SME) which have “capacity for substantial military utility or capability” such as tanks, high explosives, naval vessels, attack helicopters…

For practical purposes, ITAR regulations dictate that information and material pertaining to defense and military related technologies (items listed on the U.S. Munitions List) may only be shared with U.S. Persons unless authorisation from the Department of State is received or a special exemption is used. ITAR does not apply to information related to general scientific, mathematical or engineering principles that are commonly taught in schools and colleges or information that is in the public domain.

While political debate over the wisdom of placing all satellite and launch technology on the U.S. Munitions List (USML) has been ongoing since the advent of ITAR regulation in 1999, there has been a shift in political opinion since 2007. In late 2012, the U.S. Congress passed the 2013 Defense Authorization Bill which, if signed into law, would allow U.S. satellite manufacturers to “be more able to collaborate with international partners and [place] U.S. component makers on a more even footing in the global marketplace”.

In May 2014, the United States Department of State reclassified satellites and several related components so they will no longer be treated as munitions whose export is controlled by ITAR, but will be covered instead under the Export Administration Regulations. These new classifications took effect in November 2014, six months after the announcement of the reclassification. ITAR was loosened, especially regarding U.S. satellite component exports to thirty-six nations, including Europe. For another more than one hundred and fifty states, satellite export controls remain strict but are not prohibitive under a licensing regime now managed by the U.S. Commerce Department. Launcher technology continues to be regulated more tightly, however.

The bill “allows the president to remove commercial satellites and components from the U.S. Munitions List (USML) and allows him to decide which satellite technologies are the most important to protect. The bill still restricts the export and transfer of technology to China, Cuba, Iran, North Korea, Sudan and Syria”.

According to Kevin J. Wolf, assistant secretary at the Department of Commerce’s Export Administration Bureau of Industry and Security, “One of the legal conditions was that, whatever you do in reducing the licensing requirement, the embargo on China and a handful of other countries – a total of eighteen or nineteen countries – remains the same”. He added “That is, no U.S.-origin content, regardless of significance, regardless of whether it’s incorporated into a foreign-made item, can go to China or one of the other countries of concern”.

The U.S. Department of State insists that ITAR has limited effect and provides a security benefit to the nation that outweighs any impact that these sectors must bear. Every year, the Department of State can cite multiple arrests of ITAR violators by U.S. Immigration and Customs Enforcement agents and the FBI.

Concluding remarks on ITAR

ITAR remains a major concern in the European aerospace industry. European manufacturers of satellite components report that ITAR-free status is the first question they are asked by potential customers. Even U.S. companies have expressed interest in ITAR-free technology.