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Vol. 4 No. 4                  06-01-2000

Launcher Quotas or No Quotas? That is the Question

The House Subcommittee on Space & Aeronautics heard testimony (5/25/00) on whether or not U.S. launcher quotas should be extended when agreements expire with Russia (end of 2000), China and Ukraine (end of 2001).

"There isn't a consensus whether a "no agreement" option is better or worse than its alternative," Subcommittee Chairman Dana Rohrabacher (R-CA)said. "But the lack of clear policy direction from the Administration isnot in anybody's interest."

Four witnesses testified at the hearing:

Oren Phillips, Vice President, Thiokol Technologies International

"There is a growing excess of launch vehicle capability," Mr. Phillips said. The industry suffers from overcapacity and the most lucrative market, launching satellites to geosynchronous orbit- is flat.

Making matters worse, Mr. Phillips said there are hundreds of excess ICBMs for commercial applications as a result of START I and II. The drop In demand for launchers and increased capacity, he predicted, "will lead to predatory pricing in the absence of some form of meaningful quotas or trade agreements" and is a direct threat of the U.S. launch and propulsion industry.

Jeff Foote, President, Alliant Aerospace Propulsion Company

- Recommend "extending the commercial space launch bilateral agreements beyond their expiration date," Mr. Foot stated.

If the non-market economy (NME) countries are permitted to compete for launching U.S. commercial satellites without the restriction of quotas," Mr. Foote explained, "the impact on the U.S. launch industry could be serious". The NMEs, he said, "could significantly undercut the pricing of launchers And dump "cheap" vehicles on the market.

Pierre Chao, Managing Director, C.S. First Boston

"While global space business continues to expand, over the next two to four years the U.S. space launch industry faces a potential crisis", Mr. Chao said. Demand for launches has softened in Asia following the financial crisis in 1998, the industry is suffering from a series of satellite and launch failures, and future business has been chilled by the failures of Iridium and other global communication projects.

Mr. Chao said the global market is more volatile than year's past And there are an increasing number of commercial venders, resulting in overcapacity.

Complicating the quota issue, the lines that define the U.S. space launch industry are blurring. American companies have formed partnerships with foreign companies that produce the Proton and Zenit rockets. There also is a "growing divergence of interests between the prime contractors and the rocket motor industrial base within the U.S. space launch industry," according to Chao.

The rocket motor players Alliant Techsystems, Thiokol and others rarely have the opportunity to supply foreign primes, Chao explained.

How industry and government officials work through these divergent issues poses many challenges. "Whether U.S. industry makes it though in a healthy fashion or not will in no small measure be based on U.S. government policy," Chao posited.

Clayton Mowry, Executive Director, Satellite Industry Association (SIA)

"Our membership is united in [the] belief that the era of launch quotas must come to an end," Mr. Mowry said. "They are no longer necessary. Today's commercial satellite market requires scheduling flexibility and a diversity of suppliers that cannot be achieved under the current quota regime.

Satellite services, Mr. Mowry emphasized, are the driving force in the space industry. The past five years demand has jumped 134 percent. A key factor in the ability of U.S. satellite companies to compete in the international market for telecommunications services was the "development of a competitive marketplace for space launch vehicles," Mr. Mowry said.

"Quotas are artificially constraining the U.S. satellite industry's access to worldwide launch capacity- a critical element in our ability to maintain U.S. leadership in this arena," Mr. Mowry said. "The U.S. government should not be fooled into thinking that our companies are the only joint venture partners in the commercial space business."

Mr. Mowry urged the U.S. government to allow the quotas to expire at the end of their current terms. "Successful international joint ventures and dynamic changes in the satellite marketplace have obviated the need for these trade restrictions."

House VA-HUD-IA Subcommittee Proposes $112 Million Boost in NASA Budget

On Tuesday, the House Appropriations VA-HUD-IA Subcommittee approved A $13.7 billion budget for NASA next year, a $112 million increase from current spending. The budget is $321 million less than requested by the Administration .It fully funds the Space Shuttle program and International Space Station NASA's top priorities. Space Science is also fully funded except for a $20 million cut in a new project to study the Sun. Almost all of the reduction in spending - $290 million out of space transportation R&D, as well as cuts in aviation programs. The full appropriations Committee is scheduled on June 6 to consider the subcommittee's bill.


The National Space Society is a pro-space advocacy organization whose 20,000 members worldwide are working to create a spacefaring civilization. To learn more about NSS and its programs, call 202-543-1900 or go to http://www.nss.org


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