Export Control Panelists Warn of China's Space Ambitions, Call for Stronger Controls

Laskai, along with Vice President-Regulatory and Policy at Maxar Technologies Michael Gold and Akin Gump lawyer Kevin Wolf, warned about China’s growing space satellite ambitions, saying the country’s government has used its commercial sector to become a powerful competitor in the space industry, threatening U.S. manufacturers and necessitating a re-examination of U.S. export controls.

Wolf, who also served as Commerce’s assistant secretary for export administration from 2010 to 2017, said although the U.S.’s current export controls are “fairly aggressive,” more can be done to ensure enforcement. He said the U.S. should move away from unilateral export controls on parts and components for commercial satellites and instead coordinate with other countries. “Almost all of our other export controls we coordinate with our [North Atlantic Treaty Organization] allies and other close allies so that they have the same controls in place,” Wolf said. The same philosophy should be applied to satellite controls, he said.

Both Gold and Wolf said export control enforcement agencies need more staff and resources. “They’re severely understaffed with the mission that's given to them,” Wolf said of Commerce. Gold, who also sits on the export control committee for the Commercial Spaceflight Federation, said he was recently told by Commerce and State officials that it usually takes more than six months to hire, a large roadblock to expanding enforcement. “You can throw money at the issue, but if it takes years to hire, money isn't the only part of the solution,” Gold said. “There needs to be reforms relative to hiring.”

Previously, Laskai said, China’s largely state-operated space sector allowed the U.S. to effectively enforce export controls on Chinese companies. “But if commercial money is pouring into the sector, and that money is melding or fusing with state-owned capital, which is happening,” he said, “then it becomes much easier for state-based entities to evade export controls.” Laskai advocated for more scrutiny of companies that are buying U.S. satellite equipment, saying there is “always a state-owned capital element to the companies. We should be able to catch that and that should be a tripwire.”

While Laskai and Wolf both advocated for stronger export controls and enforcement, Gold, who oversees regulations for Maxar, a space technology company that makes satellites, cautioned the commission about regulations. Gold specifically mentioned spaced-based robotics, artificial intelligence and quantum computing, which he said will be “critical to next-generation satellites.” Gold advocated for a “balanced approach” in export controls that “will not result in unintended consequences that ultimately benefit China,” calling for the “elimination of ... bureaucracy that would otherwise hinder or prevent U.S. companies from working on emerging tech” with U.S. allies.

Gold also advocated for the complete “restoration” of the Export-Import Bank of the United States, saying the bank cannot currently approve transactions greater than $10 million. “Three billion dollars' worth of export deals are currently being held up due to EXIM inaction,” Gold said. “If the U.S. government fails to resuscitate the Export-Import Bank, domestic satellite manufacturers will be unable to compete with the Chinese, or, for that matter, rival European or Japanese firms.”

Laskai said the threats to U.S. manufacturers from China’s space ambitions are closer than they appear, saying China often “pulls out the rug from underneath the global market” when it considers a market strategically important. “We need to seriously consider the risk that China might dominate certain sections of the commercial space market,” he said. Laskai also said the U.S. faces a tension in addressing the two main risks posed by China: the short-term threat to U.S. export controls and the long-term threat that aims to undercut the U.S. space industry. “The export-control risk is going to require us to sort of clamp down,” Laskai said, “but the second more long-term risk is going to require us to really make sure our companies are competitive internationally.”

The U.S. should be prepared for a “continual evolution” of laws and regulations to remain competitive against China and elsewhere, said Assistant Secretary of the Air Force-Acquisition, Technology and Logistics William Roper, during another portion of the event. Laws like those governing the Committee on Foreign Investment in the U.S. are “not as relevant in this century,” though the Trump administration is committed to implementing the changes to CFIUS included in 2018's Foreign Investment Risk Review Modernization Act. Revisions to laws will need to balance giving “us access to the global supply chain” while also “trying to create a level playing field,” he said.

The U.S. won't be able to use the Cold War model of blocking off a bad actor to neutralize it as a threat, in part because the supply chain has become too globalized and it “doesn't appear that we can reverse that,” Roper said. The focus should instead be on developing new models that factor in the potential for some components in satellites and other space technologies having vulnerabilities. The best countermove is to design systems “able to defend themselves” and “have tricks up their sleeve” to counteract potential vulnerabilities, he said.