Frontline Volume 21 - Issue 15, Jul. 17 - 30, 2004
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INDIA & THE U.S.

Constrained cooperation

R. RAMACHANDRAN

With a high-profile conference in Bangalore, India and the United States take another step towards high-technology commerce and civil space cooperation. But further movement forward is severely constrained by the U.S.' refusal to remove ISRO from the Entities List.

THE recently concluded Indo-U.S. Conference on Space Science, Applications and Commerce, held in Bangalore during June 21-25, was remarkable for not directly addressing the issues relating to the last component of the conference, namely, commerce in space technology or high technology trade. The bulk of space technology items - goods and technical data - that the Indian Space Research Organisation (ISRO) is likely to seek from the U.S. are controlled by the latter's export control laws. This is the only area where policy level intervention by the U.S. government is required, not so much in the components of cooperation in space science and applications. Since the conference flowed directly from the joint statement issued by President George W. Bush and Prime Minister Atal Bihari Vajpayee in November 2001 that both sides would discuss ways to stimulate bilateral high-technology commerce and civil space cooperation, it was expected that the deliberations would form the basis of inputs to the ongoing discussions under a separate forum, the High Technology Cooperation Group (HTCG) (Frontline, January 2, 2004).

GAUTAM SINGH/AP

U.S. Under Secretary of Commerce Kenneth I. Juster, ISRO Chairman G. Madhavan Nair and U.S. Ambassador to India David C. Mulford at the inauguration of an ISRO stall at the `Indo-U.S. Conference on Space Science, Applications and Commerce' in Bangalore, on June 22.

The apparent lifting of post-Pokhran sanctions in September 2001 does not mean much to ISRO because its key units are still on the Entities List, as are the key establishments of the other core sectors of atomic energy and defence. The point that is often lost in U.S. officials' statements about the easing of sanctions is that these core sectors are the chief consumers of high-technology and dual-use goods. But these continue to be on the Entities List, which means that an export licence is required for all the controlled goods, including those covered by the Export Administration Regulation (EAR99), but with a presumption of approval only for EAR99 items (basket of low-technology, but controlled, goods which normally do not require an export licence). The only relaxation in the embargoes for these three core sectors is that, as regards EAR99 items, there is no presumption of denial, which was the case earlier. In other words, for real high-tech dual-use goods, it is a presumption of denial for organisations that continue to be on the Entities List.

More important, since March 1999, satellite technology, including ground telemetry and tracking equipment and radiation-hardened devices, and satellite components have been designated as munition items in the U.S. Munitions List (USML) under the U.S. International Trade in Arms Regulation (ITAR) Act. Their export - hitherto under the jurisdiction of the U.S. Department of Commerce - is now controlled by the U.S. State Department. This is tantamount to treating satellite components as items of weaponry rather than merely dual-use items. Many activities that did not require an export licence under the earlier jurisdiction of the Commerce Department, including those involving marketing, now require a licence, technical assistance agreements (TAA) and, in certain cases, monitoring by the U.S. Department of Defence. This results, more often than not, in licence denials. According to ISRO sources, even when approved, the time taken for approvals - which happens after a multi-agency review - is inordinately long.

If there is to be a movement forward on the high-tech trade front, it has to be on these issues. Unfortunately, while there were periodic references to regulatory issues in the plenary session, no specifics were addressed or discussed to arrive at a proper quantitative perspective of the issues concerning U.S. export controls. Instead of merely making general statements, ISRO should have used the opportunity to give concrete data on the nature of regulatory bottlenecks that it has had to face, including hard numbers of denials and the nature and value of items denied. As a result of ISRO's failure, the public perception on the issue will be based on the statement of Kenneth Juster, Under Secretary of Commerce, the U.S. official engaged in the HTCG negotiations with the Indian Foreign Secretary.

In his plenary address, Juster stated that 90 per cent of licence applications were approved during fiscal 2003. Making the point that the export of licensed dual-use goods to India has been rising steadily, he went on to give figures for the first half of 2004 as well. Licence applications for dual-use items during this period, valued at almost $51 million, had already been approved, compared to a total of $57 million for all of last year - an increase of some 80 per cent on an annual basis, he said. In particular, according to him, export approvals for ISRO's demands in the past year and a half increased by over 75 per cent, taking licence approvals to nearly 93 per cent - higher than the overall approval rate of 90 per cent.

But these statistics hide the fact that a large fraction of the approvals would be for EAR99 items - goods that normally do not require a licence - to the entities covered by sanctions, in particular ISRO and its subordinates, a presumption of approval for these with effect from October 1, 2001. Also, the statistics give no information about the number and value of applications to, and denials by, the State Department for satellite technology items that ISRO would be interested in acquiring. But if the true situation with regard to ISRO is not apparent, only ISRO is to be blamed for not making the relevant data public.

THIS is not to say that there has been no progress at all in space technology trade. A significant development is the granting, as mandatory under the ITAR, of TAA by the U.S. Department of State early this year, "authorising Boeing Satellite Systems to engage in discussions and share data with ISRO on the division of responsibilities for possible joint cooperation in the development and marketing of communication satellites". This has been wrongly interpreted by some commentators to mean that Boeing and ISRO are building a satellite for a third party. Boeing has only been given the licence to talk to and exchange specific data and information with ISRO to explore the possibilities of joint fabrication of a satellite. If and when the share of responsibilities is agreed upon, Boeing will have to apply for an export licence for the specific subsystems that it has to integrate with ISRO's subsystems.

Even if the two agencies succeeded in agreeing on the individual contributions questions will arise about who will carry out the integration. If ISRO is to integrate, Boeing will have to apply for additional licences and TAAs for exchange of appropriate system interfacing data and the services (which under the ITAR are termed as defence services) that Boeing will render on the Indian soil. Since Boeing is likely to market the satellite as a Boeing satellite - ISRO would prefer to ride on Boeing's brand value in the international market - it would seem natural for Boeing to do the integration and avoid complex regulatory procedures.

But the most vexing issue relates to the launch of the satellite. Can the collaboratively built satellite be launched on an ISRO launcher? It does not follow naturally. The ITAR states: "Special export controls... are always required... before the export of any article or defence service in this category (XV of USML - Spacecraft Systems and Associated Equipment) for launch in, or by nationals of, a country that is not a member of the NATO (North Atlantic Treaty Organisation) or a major non-NATO ally of the United States. Such special export controls also may be imposed with respect to any destination as deemed appropriate in furtherance of the security and foreign policy of the United States." In fact, Lee Morin a U.S. State Department official, who was present at the conference, did not give a simple answer. He said that these would be decided on a case-by-case basis. So even if ISRO contributes to the fabrication of the satellite and even if its launch costs are cheaper than Western launch costs by as much as 30 per cent, there is no assurance that the Polar Satellite Launch Vehicle (PSLV) or a Geosynchronous Satellite Launch Vehicle (GSLV) will launch the satellite. HTCG, in its next round of deliberations, may do well to recommend a policy decision that allows ISRO to provide the launch services.

THE reason for Boeing's interest in joining hands with ISRO is simple. The class of satellites that Boeing is now engaged in building are of higher tonnage whereas ISRO is in the business of 2-tonne and 3-tonne class satellites, a segment that does not have a market share that is attractive enough and which Boeing has abandoned. But there is still some demand for the ISRO-class of satellites. ISRO has a proven satellite structure (called a `bus') in the 2-tonne class and is in the process of designing the 3-tonne bus. What matters in a satellite is the payload in which any customer would like to get the best features possible. Boeing has such an advanced payload capability. ISRO will be denied import of the payload systems or its subsystems and components even if it wanted to design and integrate on its own a satellite with advanced features.

ISRO has three satellite buses: I-1K (the new one-tonne METSAT or Kalpana-1 belongs to this class), I-2K (the 2-tonne GSAT series of satellites belong to this class) and I-3K (the new bus on which the 3-tonne INSAT 4A and 4B are being configured). While I-2K is derived from the basic INSAT-2/3 structures, it is somewhat different particularly in its flexibility, modularity and, most importantly, its power capacity. According to ISRO sources, Boeing had originally shown interest in the I-2K bus but having seen the ongoing developments around I-3K, it has evinced interest in the I-3K bus as well. According to Boeing sources, ISRO's buses are the only ones with higher power capacity that can support the advanced features (which need higher power) of the Boeing payload and its transponders.

This may appear to be a win-win situation. But not quite. ISRO only gains by way of an indirect market share which may help it to gain a market share of its own in the longer term. But ISRO does not get access to the advanced technology in the Boeing payload systems. And, most important, the joint development will not automatically enable it to enter the international launch services market despite its low cost. However, success of this endeavour could pave the way for more such arrangements, in particular in the area of earth observation satellites where again ISRO has proven satellite structures. In fact, one of the recommendations of the earth observation sub-panel at the conference was to forge alliances with U.S. agencies and industry for joint fabrication of earth observation satellites.

THE U.S. satellite export policy under the ITAR (Section 121) has some special dispensations for "major non-NATO allies" which, at present, include Argentina, Australia, Egypt, Israel, Japan, Jordan, New Zealand, South Korea and Pakistan (the most recent inclusion). That is, for members of NATO and major non-NATO allies, there exists a regulatory regime of eased export controls and expeditious licensing of satellite systems, components, accessories and technical data. This regime even allows them to use their own launchers to launch satellites. Of course, these exports are exclusively to specified approved entities and specific approved satellite programmes. In principle, Pakistan can now seek import of satellite systems, sub-systems, components and relevant technical data permitted under the ITAR for some specific space programme and expect the licence to be granted expeditiously. In that sense, theoretically speaking, Pakistan is in a better position than India vis--vis access to U.S. satellite technology. However, Pakistan has no major ongoing space programme that would make use of this licensing exception. The question is whether HTCG dialogue can result in a U.S. policy whereby India is accorded the status of a major non-NATO ally as regards satellite technology exports.

Towards the end of the conference an announcement was made regarding the collaboration between ISRO and the National Oceanic and Atmospheric Administration (NOAA) of the U.S. on the next generation U.S. remote sensing satellite system called National Polar-orbiting Operational Environmental Satellite System (NPOESS). The first satellite in this system is expected to be launched in 2009. NPOESS is designed provide rapid - with a maximum delay of 20 minutes - distribution of global and regional environmental imagery, meteorological, climatic, terrestrial, oceanic and solar-geophysical data for use by the international community.

K. GAJENDRAN

Boeing has shown interest in the basic structure on which GSAT is built.

The ISRO-NOAA effort is intended to support the receipt of high quality data derived from the NPOESS system. NPOESS plans to set up 15 worldwide reception stations located on all seven continents. One of these stations could be in India. NOAA industry partners Northrop Grumman Space Technology and Raytheon Company are under contract to implement the system and they are currently discussing it with ISRO. All indications at the conference were that ISRO has okayed the proposal. There are no export controls for the systems needed to set up the station. But there are other issues.

ISRO Chairman G. Madhavan Nair said: "We are excited about the potential for this collaboration and we recognise the vast scientific value of this programme." However, what additional benefits ISRO will gain by locating an NPOESS receiving station - which will be maintained by U.S. engineers - in India is not clear. The question is whether ISRO will have access to all the data that passes through the Indian hub. This is unlikely because NPOESS is a combined military-civilian remote sensing system. So India may not actually be able to get high resolution (1 m and less) data from the network. Madhavan Nair said that they were "discussing" the issue. But the likelihood of getting access to all the data appears remote. ISRO can probably bargain for both raw and processed civilian remote sensing data free. At least, this much should be possible given all the hype of enhanced Indo-U.S. space cooperation.

On January 12, following the last round of HTCG talks, President Bush announced that the U.S. had embarked upon the Next Steps in the Strategic Partnership Initiative (NSSP). This sets out a vision to expand cooperation in civil nuclear energy, civil space technology and high-technology trade and to "expand dialogue in missile defence."

Given the restrictions emerging from the U.S. non-proliferation policy and the Nuclear Suppliers Group, the first component can at best be limited to cooperation in safety-related issues; certainly there can be no transfer of nuclear technology or equipment. The second component has potential but is again limited by the U.S. regulatory framework with regard to the export of satellite technology (under the ITAR) and launch vehicle technology (under the Missile Technology Control Regime). The former is unilateral and, therefore, can be relaxed if the U.S. decides to do so.

CARLETON BAILIE/BOEING/REUTERS

A Boeing Delta II rocket, carrying a replacement satellite for the U.S. Air Force's Global Positioning System (GPS), lifts off from the Cape Canaveral Air Force Station in Florida, on June 23, 2004.

The Boeing example, if successful, may set a precedent. Purely in terms of space sciences, satellite navigation networks and participation in each other's space-based astronomy and planetary science programmes, extensive cooperation is possible but that does not need any high level policy intervention - creating appropriate flexible systems for exchange of scientists and funding will be sufficient.

Increase in high-technology trade can occur only to a limited extent. This depends upon how much the U.S. government is willing to relax its export controls, at least as regards those that are not bound by multilateral regimes, and lift sanctions on at least those units on the Entities List which are not directly involved in nuclear weapons and missile development.

Hopefully, the perception gained by the U.S. officials at the end of the Bangalore meeting is positive enough for them to remove ISRO and its subordinate units from the Entities List. At this stage, it is not clear what shape NSSP would take. But removal of ISRO from the Entities List could mark a beginning in the direction.

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