"We can't pretend that all issues have been resolved.
We will need to be certain that China honors the commitments
it has made. Any actions violating these commitments
would cut off our peaceful nuclear cooperation."

James B. Steinberg,
Deputy Assistant to the President for National Security Affairs

November 1, 1997

On June 11, 1998, President Clinton emphasized "it is important for every American to understand that there are strict safeguards [surrounding satellites], including a Department of Defense plan for each launch, to prevent any assistance to China's missile programs."

China launched its first satellite in April of 1970. By the beginning of 1998, China had launched 80 various satellites, including 12 "experimental" ones (which may have directly contributed to its military might).1

"China Great Wall Industry Corporation (CGWIC) has been China's space launch company since 1986. It is a state-owned corporation in China's defense-related aerospace industry. CGWIC belongs to the China Aerospace Corporation (CASC), which oversees China's space and missile research and development establishment. It develops strategic and tactical ballistic missiles, space launch vehicles, surface-to-air missiles, cruise missiles, and military (reconnaissance, communications, or other) and civilian satellites. CGWIC uses the Long March series of rockets to launch satellites. The Long March boosters are also produced as China's DF-4 and DF-5A intercontinental ballistic missiles (ICBM) deployed in the Second Artillery, the strategic missile force of the People's Liberation Army (PLA), China's military. China's launch facilities, such as the Xichang Satellite Launching Center in southwestern Sichuan province, are at PLA bases."2

In 1989, after the Tianamen Square massacre, sweeping sanctions were imposed against China. These sanctions included prohibiting China from purchasing "dual-use" technology, unless the President issued a special waiver.3

Between 1990 and 1993, 19 "dual-use" technology license applications from China for satellites were approved by the Commerce Department, for a total of 67 transfers. President Bush signed the appropriate waivers for these transfers.4

Dual-use transfers fell under the Coordinating Committee for Multilateral Export Controls (COCOM) guidelines and were subject to final approval by the State Department, who could defer to the Department of Defense, if necessary. The Department of Defense, under it’s Technology Safeguards Monitoring Program, oversaw the launches of U.S. built satellites in China and could demand special documents, technical information exchange assurances, and agreements to confirm non-military end-use.5

In October of 1992, President Bush transferred some dual-use licenses to the Department of Commerce, which presumably were under the same COCOM guidelines as the State Department.6 "These regulations also defined what satellites remained under [State’s] control by listing nine militarily sensitive characteristics that, if included in non-military satellites, warranted their control on State's munitions list. The regulations noted that parts, components, accessories, attachments, and associated equipment (including ground support equipment) remained on the munitions list, but could be included on a Commerce license application if the equipment was needed for a specific launch of a commercial communications satellite controlled by Commerce."7

While Commerce controlled a portion of the satellite list, other agencies (State, Defense, Energy, and the Arms Control and Disarmament Agency) could prohibit a Commerce transfer if they determined it would be detrimental to the United States.8

Ironically, when the U.S. imposed sanctions against China in April of 1993 (specifically against CGWIC), the State Department denied China’s requests for satellites, but the Commerce Department approved them (even though components of the dual-use satellites were considered "military").9 In September of 1993, The Trade Promotion Coordinating Committee, chaired by Ron Brown, the head of the Commerce Department, recommended shifting all commercial satellites completely into Commerce’s hands.10

President Clinton called for the elimination of COCOM in 1993, and planned to let them expire in April of 1994.11 On March 17, 1994, Ron Brown, Head of the Commerce Department, created a new transfer license category, GLX (General License Transfer), which was meant to replace the COCOM guidelines.12 The Commerce Department allowed the other departments (State, Defense, Energy, and the Arms Control and Disarmament Agency) only 3 weeks submit approval.13 Brown assured the other departments that the GLX category was within the COCOM guidelines; with these assurances, approval was given.14

On March 31, 1994, COCOM expired.15

"The United States approved more than 1,500 licenses for dual-use items, mainly high-speed computers, to eight countries with suspected nuclear weapons programs, significantly increasing the risk that U.S. exports are fueling nuclear proliferation. Weaknesses in the interagency licensing review process have resulted in the approval of a number of sensitive license applications without review by the Energy Department or other members of the Subgroup on Nuclear Export Coordination, an interagency group. U.S. government approval of sensitive exports dictates the need for effective ways to prevent or detect export diversions, but GAO discovered several weaknesses in current procedures. These include (1) inadequate criteria for selecting pre-license checks and post-shipment verifications, (2) ineffective methods used to do these inspections, and (3) a lack of verification of government-to-government assurances against nuclear end uses." 20

On August 4, 1994, under PDD4 (National Space Transportation Policy), Section VI, President Clinton authorized the Department of Defense to use "excess ballistic missiles" for launches: "Mindful of the policy's guidance that U.S. Government agencies shall purchase commercially available U.S. space transportation products and services to the fullest extent feasible, [the Department of Defense’s] use of excess ballistic missile assets may be permitted for launching payloads into orbit…"21

In April of 1995, a meeting occurred between the State Department and the Chairman of the President's Export Council. The meeting centered on "liberating" restrictions for communication satellites and turning full control of their transfers over to the Commerce Department.22 In response, the State Department, under Secretary of State Warren Christopher, "formed the Comsat Technical Working Group (comprised of individuals from the State Department, the Department of Defense, the National Security Agency, the National Aeronautics and Space Agency, and intelligence…) to review the matter."23

"Defense and State officials said they were particularly concerned about the technologies to integrate the satellite to the launch vehicle because this technology can also be applied to launch ballistic missiles to improve their performance and reliability. Accelerometers, kick motors, separation mechanisms, and attitude control systems are examples of equipment used in both satellites and ballistic missiles. State officials said that such equipment and technology merit control for national security reasons. They also expressed concern about the operational capability that specific characteristics, in particular anti-jam capability, cross-links, and base-band processing, could give a potential adversary."24

Commerce officials said that, "according to agreed interagency procedures, DOD [Department of Defense] reviewed all Commerce license applications for China for national security reasons and MTCR Annex items, except where there were specific delegations of authority to Commerce. However, high-level Defense Technology Security Administration officials said that they were unfamiliar with referral criteria for MTCR Annex items and that there was no written agreement on such referrals between DOD and the Commerce Department."25

"In fact, DOD requested a review of criteria and referral procedures in May 1994 and corresponded with Commerce several times on how to implement it. Also, the current and past chairmen of MTEC criticized Commerce's referral of missile technology cases for interagency review. The current chairman said that Commerce would not release…the Licensing Officer's Operating Manual, which contains referral criteria. The officials further said that Commerce does not have the technical expertise to properly review missile technology applications and should not be pre-screening them."26

"Consistent with the findings of the Comsat Technical Working Group and with the input from industry through the Defense Trade Advisory Group, the Secretary of State denied the transfer of commercial communications satellites to Commerce in October 1995 and approved a plan to narrow, but not eliminate, State's jurisdiction over these satellites."27

Commerce appealed the decision and the President agreed.28 On December 5, 1995, he issued EO12981, which allowed Commerce "to require, review, and make final determinations with regard to export licenses, documentation, and other forms of information submitted to the Department of Commerce pursuant to the Act and the Regulations or under any renewal of, or successor to, the Export Administration Act and the Regulations." Concerning review by other agencies, "the Secretary may refer license applications to other United States Government departments or agencies for review as appropriate."

On February 15, 1996, a Long March missile failed shortly after take-off. On board the rocket were "two American cryptographic chips."29 For five hours, Chinese officials prevented U.S. engineers and a Pentagon official from inspecting the field of debris.30 "When the Americans finally reached the area and opened the battered but intact control box of the satellite, a supersecret encoded circuit board was missing."31 "Congressional Republicans say that Chinese officials may have retrieved American encryption devices from the debris, compromising classified U.S. communications codes. Administration and industry officials say chances are extremely remote that the Chinese found the sensitive gear."32

"On March 25, 1996, GLX and several other general license categories were consolidated into the license exception ‘CIV’ for exports going to civil end-users. CIV does not provide additional guidance to exporters on how much military involvement is needed before a commercial entity is considered a military end-user."33

"Unlike State, Commerce does not require a company to obtain an export license to market a satellite. Commerce regulations also do not have a separate export commodity control category for technical data, leaving it unclear how this information is licensed…Without clear licensing requirements for technical information, Defense does not have an opportunity to review the need for monitors and safeguards or attend technical meetings to ensure that sensitive information is not inadvertently disclosed."34

In March of 1996, President Clinton overturned Comsat and Secretary of State Warren Christopher’s decision entirely by transferring full control of satellite exports to Commerce.35 "The functioning of the Operating Committee, the interagency group that makes the initial licensing determination, was also modified. This change required that the licensing decision for these satellites be made by majority vote of the five agencies, rather than by the chair of the Committee. Satellites were also exempted from other provisions governing the licensing of most items on Commerce's Control List."36

Although Commerce operated under these changes for several months, they were not officially published until October and November of 1996.37

On October 12, 1996, President Clinton issued Executive Order #13020, which modified EO 12981, a continuation of EO 12924; this executive order transferred licensing jurisdiction for all communication satellites and commercial jet engine hot section technologies directly to the Commerce Department.38

"Hot section technology gives U.S. fighter aircraft the ability to outlast and outperform other aircraft, a key element in achieving air superiority. Because of the military significance of this technology, State [did] not allow the export of the most advanced hot section technology for either military or commercial use."39

Ultimately, due to the failure of a satellite shortly after takeoff, the concerns expressed by the Comsat team were realized. "A classified report at the Department of Defense's Defense Technology Security Administration (DTSA) reportedly concluded in May 1997 that Loral and Hughes transferred expertise to China that significantly enhanced the reliability of its nuclear ballistic missiles and ‘United States national security has been harmed.’"40

Moreover, "the Administration considered…issuing a blanket waiver of sanctions on satellites, and increasing the quota on the numbers of satellites China is allowed to launch in return for further cooperation in missile nonproliferation, according to a secret March 12, 1998, National Security Council memo."41

Despite all this, on May 10, 1999, the President granted a special waiver for China to purchase "satellite fuels and separation systems for the U.S.-origin Iridium commercial communications satellite program" because "the material and equipment, including any indirect technical benefit that could be derived from such export, will not measurably improve the missile or space launch capabilities of the People's Republic of China."42

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