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Satellite Exports Getting Review

China: The GOP blasted Clinton over the issue of trading with Beijing, but now it's changing its tack. Moves are afoot to resume allowing the Communist country to launch U.S. equipment.


WASHINGTON — Three years ago, Republicans in Congress launched a ferocious attack on President Clinton for approving the export of satellites to China in a way they said harmed America's security.

Now, with a Republican in the White House and a satellite industry complaining of lost business, Washington is singing a different tune.

Amid the furor of the late 1990s, the Republican Congress enacted legislation making it harder for companies to win government approval of satellite exports. Meanwhile, Clinton put satellite export applications to China on hold.

Now Congress is considering legislation that would reverse the changes enacted in 1999. Separately, the Bush administration is thinking of clearing the way for U.S. companies to have their satellites launched on Chinese rockets again.

All of this is happening at the instigation of a U.S. satellite industry that says hundreds of millions of dollars in sales have gone to European competitors because of delays caused by the stricter procedures.

Most of the country's leading satellite firms are based in California, where the industry employs an estimated 25,000 people, mostly engineers and other high-skilled workers. Rep. Dana Rohrabacher (R-Huntington Beach) has heard their plea.

As recently as two years ago, Rohrabacher was perhaps the harshest Republican critic of the Clinton administration's China policy and its approval of satellite exports.

Now he is one of two co-sponsors of a bill to undo the Clinton-era reforms.

"I'm trying to be practical here," Rohrabacher explained. "I wasn't out to destroy any satellite industry. If we can trade with Communist China in a way that doesn't put our country and our national security at risk, that's fine."

In 1999, Congress transferred authority over satellite exports from the Commerce Department to the State Department. The Commerce Department is considered more sympathetic to business and has quicker, looser licensing requirements than the State Department, where national security considerations are paramount.

Under a separate law passed after China's 1989 repression of protests in Tiananmen Square, satellites may not be exported to the country without a special presidential waiver.

The State Department is reviewing at least three applications for satellite launches in China, and it could submit one or more for President Bush's final approval soon. One of these comes from Loral Space and Communications Corp., the company that was at the heart of the Clinton-era controversy.

Any satellite application that Bush approves still is subject to a congressional veto. In April, while China was holding the crew of a U.S. reconnaissance plane, several experts suggested that the incident might so inflame public opinion that it would cause a long-term freeze on U.S. satellite launches in China.

Now, however, with the uproar over the plane incident subsiding, State Department officials privately predict that at least one application for a satellite launch in China may be approved soon.

"If you'd talked to me a month ago, I'd have said there was no way this was going to happen," said an executive at one of the satellite firms now applying for a license at the State Department. "Back then, it would have been ridiculous to send up a request to Congress."

Satellite companies often are required to pay millions of dollars in penalties if licensing delays cause them to postpone a launch.

Loral said earlier this year that the company would have to refund $134 million and pay $11 million in penalties if it couldn't win U.S. approval for the launch of a satellite in China. Another firm, Intelsat, has said it faces a July deadline.

Ever since Congress shifted authority over satellite exports to the State Department, industry representatives have been arguing that the new rules are too cumbersome.

"It's not just a time issue," said Clayton Mowry, executive director of the Satellite Industry Assn. "There are several other factors that make it more difficult to be competitive under the State Department system.

"Anything valued at over $50 million has to be sent up to Congress, which adds uncertainty to the licensing process. Anything on the State Department list can be the subject of economic sanctions. And it also requires many more licenses to do the same business under the State Department system than at the Commerce Department."

There is an underlying rationale for the State Department's tougher requirements. Generally, the State Department regulates the sale of weapons and other military equipment, while the Commerce Department controls the export of commercial items that are intended for commercial use but might still have military applications.

As a result of the China controversy, Congress three years ago effectively reclassified satellites as military items, making them covered by the tighter rules of the State Department's munitions list.

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