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  •   Conferees on Hill Agree to Return Satellite Export Licensing to State

    By Walter Pincus
    Washington Post Staff Writer
    Saturday, September 19, 1998; Page A07

    A House-Senate conference has agreed to transfer export licensing for all commercial communications satellites from the Commerce Department to the State Department and toughen rules governing such transactions involving China. The move would reverse a 1996 decision by President Clinton that came under fire this year amid allegations of unauthorized technology transfers to China and favoritism to a big campaign contributor.

    The agreement on the fiscal 1999 Defense Authorization Bill would also require the president to certify to Congress in advance of any deal with China that the missile equipment or technology involved "is not detrimental" to the U.S. space launch industry and does not "measurably improve" China's ability to launch missiles.

    The transfer of licensing jurisdiction to the State Department would return satellites to the U.S. munitions list, which would put them under stricter export controls. For example, satellite transactions could be banned with countries involved in missile proliferation. China has been sanctioned twice for selling missile technology to third countries.

    The change results from a controversy over whether China received illegal transfers of U.S. technology through commercial deals in which U.S. satellite manufacturers launched their products into space using Chinese missiles. Such a practice has become common because of the lower cost of using Chinese launching facilities and a backlog of planned satellite launches in other countries.

    The licensing process for foreign launches was transferred to Commerce, in a process that began under the Bush administration in 1992, in part because the State Department process involved interagency reviews that caused delays. Since satellites are sold years in advance, being able to meet a predictable set of deadlines is often key in making sales.

    Under the House-Senate agreement, State was given additional funds to administer the program and told by the conferees to establish a timetable for ruling on license applications.

    But Clayton Mowry of the Satellite Industry Association said yesterday that U.S. companies, which today dominate the world market, may lose contracts because the new rules could delay the delivery of U.S. satellites.

    White House officials, who earlier this year had threatened a veto for House-approved proposals that would prohibit all satellite and missile parts exports to China, said yesterday that they were studying the conference language, in which the transfer from Commerce to State would go into effect on March 15, 1999. The House-Senate agreement on satellite exports was first reported in yesterday's New York Times.

    There is still disagreement within the administration and on Capitol Hill over whether the Chinese, through their launching of U.S.-built satellites, obtained inappropriate missile technology in violation of U.S. laws and regulations.

    The controversy arose out of a 1997 technical review by U.S. companies of a 1996 Chinese missile crash. The Air Force's National Air Intelligence Center said the technical report may have contained "potentially very significant help," according to a subsequent White House memo. A CIA review of the same material determined the materials did not raise "proliferation concerns" that could harm national security.

    These disagreements -- along with allegations that contributions to the Clinton campaign bought influence for Bernard Schwartz, head of Loral Space & Communications Ltd., the satellite manufacturer involved -- led Republicans to initiate House and Senate investigations that are still underway.

    At a hearing Thursday before the Senate Armed Services Committee, Franklin Miller, principal deputy assistant secretary of defense, told the panel that he doubted China's intercontinental missile system had benefited from U.S. technology transfers.

    © Copyright 1998 The Washington Post Company

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