Illustration by Frazer Hudson

IN THE spring of 2006 Robert Bigelow needed to take a stand on a trip to Russia to keep a satellite off the floor. The stand was made of aluminium. It had a circular base and legs. It was, says the entrepreneur and head of Bigelow Aerospace in Nevada, “indistinguishable from a common coffee table”. Nonetheless, the American authorities told Mr Bigelow that this coffee table was part of a satellite assembly and so counted as a munition. During the trip it would have to be guarded by two security officers at all times.

Exporting technology has always presented a dilemma for America. The country leads the world in most technologies and some of these give it a military advantage. If export rules are too lax, foreign powers will be able to put American technology in their systems, or copy it. But if the rules are too tight, then it will stifle the industries that depend upon sales to create the next generation of technology.

It is a difficult balance to strike and critics charge that America has erred on the side of stifling. They claim that overly strict export controls have so damaged the space industry that America's national security is now threatened by its dwindling leadership in space technology. The system, they complain, fails to distinguish between militarily sensitive hardware that should be controlled and widely available commercial technologies, such as lithium-ion batteries and solar cells. The zealous application of the export rules is the American space industry's biggest handicap.

Egocentric orbit

The controls governing America's export of satellites are part of the International Traffic in Arms Regulation (ITAR) and they are handled in the Department of State. At one time the Department of Commerce had the job. But in the mid-90s a great controversy arose when information was shared between American satellite makers and the Chinese. Politicians reacted to fears that secrets had been passed to China by moving control of space exports to the State Department.

Michael Beavin, a programme analyst at the Office of Space Commercialisation in America's Commerce Department, says that the wording of the legislation is open to broader interpretation than Congress intended. An international GPS ground station may have to get export approval to buy a new screen for its Dell laptop, because it is part of a system that is controlled. Pierre Chao, a senior associate at the Centre for Strategic and International Studies (CSIS), a think-tank in Washington, DC, says that as soon as satellites were put on the munitions list “the little screw and the commodity wiring became a munition”. Furthermore, anything modified for a munition is a munition. This clause, he says, captures all the little “doodads”. In fact, he explains, it's the extremely sophisticated “part X” that you want to keep out of the enemy's hands, not the whole box. “You are using an extremely blunt instrument for sophisticated policy needs.”

You may think that is the price of security, but Lon Rains, the editor of Space News, says that ITAR has “sped up the inevitable proliferation of advanced technology, by forcing other countries to find other means of obtaining satellite components that had previously been manufactured only in the United States.” Joe Rouge, the director of the National Space Security Office at the Pentagon, thinks that ITAR probably made sense a decade ago but agrees that it is now a blunt instrument. “The problem is that today you can buy international equivalents that are as good as what American industry is producing.”

The result is a system that is too successful in keeping American technology out of foreign hands. Before 1999, when the State Department took over the export regulation of satellites, America dominated commercial satellite-making with an average market share of 83%. Since then, this share has declined to 50%, according to Space Review. ITAR's critics blame the change in export controls. As bidding opened in July this year for the €3.4 billion ($5 billion) of contracts for Galileo, a constellation of 30 positioning satellites being built by the European Union and the European Space Agency, European officials cited export controls as a reason for avoiding anything to do with America wherever possible.

At the start of the decade, Alcatel Alenia Space (now Thales Alenia) announced that it would create an “ITAR-free” spacecraft, purged of all American components. Between 1998 and 2004 the company doubled its market share to over 20%, becoming perhaps the greatest beneficiary of export policies. Export controls also prompted the European Space Agency to pay to develop a European supplier of solenoid valves, so that European space-propulsion systems do not depend on this American part. Similarly, Telesat, Canada's satellite-fleet operator, has said that ITAR is one of the reasons it has selected European satellite builders in recent competitions. And in 2005 EADS Sodern, a French maker of satellites' control and positioning systems and subsidiary of the Franco-German company EADS, said it would start to phase out its American supplier base.

Meanwhile, American components and satellites are suffering because of the cost and delays in doing business with the firms that make them. International companies cannot access an inventory of vital American satellite components and place orders as the need develops because each component must run the gauntlet of export controls. Whether the component is a motor, a control valve, a star tracker, an antenna or a chip, it is simpler to look for non-American alternatives.

For years, critics have grumbled about the export controls at meetings. Until recently, the State Department ignored such complaints. Mr Chao, of CSIS, reckons this attitude is changing. The marketing of the ITAR-free satellite woke people up. More than that, though, he says that data have started to accumulate.

In 2006 a survey of American industry executives found that ITAR's licensing requirements were hard to understand and took an unpredictable amount of time to negotiate; this hindered strategic decisions. And in 2007 a survey of around 200 space companies by the Air Force Research Laboratory cited export controls as the highest barrier to foreign markets.

Just across the border, in Canada, the effects were just as profound. A study in 2006 of Canadian space companies found that 70% faced delays of three to 12 months because of ITAR. All of them could find non-American suppliers for the technologies they were looking for. And after 1999 in Canada, there was also a big dip in the number of American-Canadian projects.

Reducing the revenue and profit of the space industry might be a reasonable thing to do if such constraints supported military objectives. But critics accuse ITAR of imposing such a burden on smaller companies that it is harming the entire industry, and thus national security.

Prime contractors, such as Boeing and Lockheed Martin, can absorb ITAR's costs as part of doing business. But the second-tier contractors that support them and the third-tier component suppliers are having much more trouble. The burden of compliance on the component-makers was nearly 8% of foreign sales in 2006. For prime contractors this was 1%. A spokesman for the State Department says that it would be wrong to assume export controls directly caused the weakness of third-tier component suppliers. He added that they could be suffering from any number of difficulties, including “offsets, globalisation, foreign industrial priorities and policy, even the domestic corporate-tax structure.”

Whatever its cause, a CSIS study published in February concluded that America was being harmed. Second- and third-tier companies are important innovators. Moreover, in fields like solar cells, travelling-wave tubes and read-out integrated circuits, there is either only one domestic supplier or a financially weak supplier. The situation is so bad, say some, that the Pentagon fears it may have to start buying satellite components overseas—rather as NASA, America's space agency, is scrabbling around to find transport to carry its astronauts to the international space station (see article). Mr Rouge thinks the health of the industry should be a matter of military concern.

It is not only private companies that are suffering. In 2005 the European Space Agency concluded that ITAR made its co-operation with NASA's Mars rover “too complicated to be feasible” and that it had to become more autonomous. Others have warned that delays in agreements allowing Americans to speak with foreigners (known as technical-assistance agreements) are a threat to the safe operation of the International Space Station.

Illustration by Frazer Hudson

Mr Beavin explains that ITAR may define technology “exports” as any disclosure to foreign nationals, such as web posts, international scientific meetings and exchanges, conferences and technical data. “The academic world is used to sharing and it really makes it hard for scientific exchange. Nobody wants to be slapped with a gigantic fee or go to jail. It is scaring everyone into not talking, and that's crippling for science.”

Around the world, space-faring nations such as China and India are making great progress, whether they have access to American technology or not. Mike Gold, director of Bigelow Aerospace's office in Washington, DC, has nothing good to say about the country's export policy: “if the purpose of ITAR is to lose billions of dollars of business, ship jobs overseas, and the Iranians and the Chinese get the same technology anyway, then mission accomplished.” The regime, he says, is obsolete and counterproductive.

Mr Gold believes that the State Department has failed to take the time and effort to distinguish between space technologies, as the law allows. Instead, he charges, the bureaucracy has taken the “safe and easy” option and declared everything to be a munition until proven otherwise. Given the fuss over the way the Commerce Department administered the legislation, perhaps that should come as no surprise.

Escape velocity

In December Bigelow Aerospace filed a commodity-jurisdiction request which would oblige the Directorate of Defence Trade Controls to rule whether one of its products, a set of inflatable space habitats, should be on the State Department's munitions list. Although it is unclear how far the request will get, it may be the first direct challenge to the department's implementation of ITAR for space technology.

There are signs of change. In late January the White House made some small adjustments to the way the ITAR regulations would be administered. The most important was a promise that licensing decisions would be taken within 60 days of an application. Mr Rouge says that work is also afoot to update the munitions list, which contains the set of military technologies that must be protected. The idea is to make sure the right technologies are controlled. “We are in the process of setting up to do that. We now understand the problem and its ramifications.”

And Mr Rouge says that Congress and the White House are weighing whether to change the ITAR legislation itself. When might this happen? “It's a pre-decisional situation,” he says obliquely. Mr Chao thinks that such a reform would represent a sea-change in export legislation.

Such change is overdue. There can be a trade-off between trade and security, but America's regime is so badly designed that it can have more of both. This means spending less time on schemes to control the movement of coffee tables, and more on what really matters.