One of the more unusual aspects of US Trade policy since 1976 has been the International Traffic in Arms Regulations. Signed into law by President Gerald Ford, ITAR was designed to prevent the export of sensitive military technologies to the Soviet Union and its allied nations. Even with the collapse of the Soviet Union, ITAR remains in place, in theory to prevent military technologies from falling into the hands of hostile groups.
The problem with ITAR has been the almost glacial speed by which it understands and incorporates new technologies. One noted case in the 1990′s resulted in Space Systems/Loral being penalized for export violations due to the launch of Intelsat 708, where the launch vehicle failed to deliver the satellite and the resulting insurance investigation had the Chinese scientists who had built several of the systems involved. It appears that the Department of Defense was concerned that the Chinese could watch the Playboy Channel, as the satellite in question was to be used for television transmission and its main cryptography, the portion which the Department of Defense was upset about, was for the scrambling of protected content. After that incident, export controls on satellites were further tightened, setting a standard which resulted in the Apple Macintosh being listed as illegal to export, leading to this commercial:
The tightening of controls paired with the failure of keeping pace with the technology had a myriad of results in the US. In 1998, the United States produced 85% of the worlds satellite systems. According to The Space Review, by 2006, it had dropped to only 40%. This dramatic reduction in US systems has resulted in billions lost for the general economy, and the dramatic reduction in US-based launch services. In 1999, there were 7 primary launch companies handling US satellites operating out of the US. Today there are three. ITAR also helped increase the number of foreign built airplanes, restricting the sale of civilian airplanes to companies which fly overseas. Even a simple laser pointer can be listed as a restricted item, due to its commonality with laser scopes for rifles.
So, when a company cannot export from the US, what do they do? They don’t build it in the US. Why invest money in a US factory only to then have most of the worlds markets shut off to them, and those few which are available you can only sell to them after significant investigation, paperwork, and delay.
Right now, the US Senate is working on Senate Bill 3211, reforming the process by which US companies can export technology labelled by the state department as “sensitive” or “dual-purpose.” The changes would allow more rapid updating of the lists of technologies which can be exported, by changing the current system, which requires congressional, department of defense, and department of state to all sign off on changes, to one which is contained entirely within the executive branch. While on paper the bill addresses specifically satellites, the technologies which are tied to such systems are utilized in a wide variety of areas far beyond satellite launches, from cell phones to game consoles. That these are restricted is almost laughable, considering where these are manufactured. This is not the ideal fix, I highly doubt there is one, but it does at least allow a more streamlined method to handle such cases, eliminating many of the arguments which have driven the manufacture of high technology components and systems overseas. This decades long ban of high technology exports does not make us more secure, it only hurts our standing in the world economy.