42 EXPANDING GLOBAL LAUNCH SERVICESenvisaged time, in respect <strong>of</strong> cost, reliability andmission suitability.”Additionally, <strong>the</strong> States participating in <strong>the</strong> Arianeproject, in <strong>the</strong> same year made a commitment on <strong>the</strong>preferential use <strong>of</strong> <strong>the</strong> Ariane launch vehicle similar to<strong>the</strong> above treaty provision, both in respect <strong>of</strong> ESAactivities and <strong>of</strong> national space activities, and promisedto support such use in <strong>the</strong> framework <strong>of</strong> <strong>the</strong>international programmes in which <strong>the</strong>y participated.The U.S. Federal departments and agencies abideby a Presidental policy <strong>of</strong> 1990, confirmed at lateroccasions, that“U.S. government satellites will be launched on U.S.manufactured launch vehicles unless specificallyexempted by <strong>the</strong> President.”The Commercial Space Act <strong>of</strong> 1998, dealing, interalia, with <strong>the</strong> same ‘fly U.S.’ subject, does not use <strong>the</strong>country <strong>of</strong> manufacture <strong>of</strong> <strong>the</strong> launcher as a criterion,but <strong>the</strong> nationality <strong>of</strong> <strong>the</strong> launch provider:“Except as o<strong>the</strong>rwise provided in this section, <strong>the</strong>Federal Government shall acquire space transportationservices from <strong>United</strong> States commercial providerswhenever such services are required in <strong>the</strong> course <strong>of</strong> itsactivities. To <strong>the</strong> maximum extent practicable, <strong>the</strong>Federal Government shall plan missions to accomodate<strong>the</strong> space transportation capabilities <strong>of</strong> <strong>United</strong> Statescommercial providers.”12Though <strong>the</strong> purpose <strong>of</strong> <strong>the</strong> above U.S. andEuropean provisions is basically <strong>the</strong> same, <strong>the</strong>re areinteresting differences in practice and in practicaleffects.• Traditionally, <strong>the</strong> U.S. government market hasbeen considerably larger, in number <strong>of</strong>12 See Commercial Space Act <strong>of</strong> 1998, P.L. 105-303 (HR 1702),Title II - Federal acquisition <strong>of</strong> space transportation services,Sec.201-206. A U.S. commercial provider is defined as “acommercial provider, organized under <strong>the</strong> laws <strong>of</strong> <strong>the</strong> <strong>United</strong>States or <strong>of</strong> a State, which is (A) more than 50 percent ownedby <strong>United</strong> States nationals; or (B) a subsidiary <strong>of</strong> a <strong>for</strong>eigncompany..”, with category (B) subject to a number <strong>of</strong> specificstringent criteria.launches and value, than <strong>the</strong> European market<strong>of</strong> ESA and national member statesgovernment launches. (Only <strong>the</strong> Russianmarket <strong>of</strong> civilian and military launches cameanywhere near <strong>the</strong> U.S. total). Data from <strong>the</strong>above FAA Report show <strong>the</strong> following figures<strong>for</strong> 1998:CommercialNoncommercialU.S 17 19 36Russia 5 19 24Europe 9 2 11China 4 2 6Totallaunches• Nei<strong>the</strong>r ESA nor <strong>the</strong> individual ESA memberstates or <strong>the</strong> Ariane participants havescrupulously adhered to <strong>the</strong> ‘Ariane preference’commitments. In practice, ESA madeexceptions to <strong>the</strong> rule when faced withoperational or financial difficulties.Additionally, some member states feel free touse <strong>the</strong> cost level <strong>of</strong> <strong>the</strong> Ariane, compared to itscompetitors’, or <strong>the</strong> (semi-)privatized status <strong>of</strong>its telecom agency as an argument <strong>for</strong> choosinga competing <strong>for</strong>eign launch provider. Andregional European space organizations likeEutelsat and Eumetsat felt some commitmentbut no obligation to use <strong>the</strong> Ariane.By contrast, <strong>the</strong> U.S. government agencies so farhave felt obliged, by law and policy, to use domesticlaunch vehicles and launch providers, and have actedaccordingly. An additional factor supporting <strong>the</strong> U.S.firmness in this respect is <strong>the</strong> availability <strong>of</strong> alternativedomestic launch providers: in addition to <strong>the</strong> SpaceShuttle and <strong>the</strong> Air Force- operated Titan, two privatecompanies, Boeing and Lockheed Martin, may help out;and <strong>for</strong> LEO launches and smaller payloads, a thirdprivate company, Orbital Sciences Corporation,provides <strong>the</strong> Pegasus and Taurus launchers.The overall effect <strong>of</strong> <strong>the</strong> above regulations andpractices, based on a combination <strong>of</strong> national security
EXPANDING GLOBAL LAUNCH SERVICES 43and competitive considerations, is that a sizeable part <strong>of</strong><strong>the</strong> total global launch market is not open tointernational competition, to <strong>the</strong> disadvantage, <strong>of</strong>course, <strong>of</strong> <strong>the</strong> excluded launch providers, but in <strong>the</strong> endalso <strong>of</strong> both <strong>the</strong> respective governments and <strong>the</strong> privatecustomers.Effects <strong>of</strong> <strong>the</strong> present regulatoryenvironment on <strong>the</strong> globalprovision <strong>of</strong> launch servicesIn <strong>the</strong> <strong>for</strong>egoing, a few observations on <strong>the</strong> abovesubject have already been made. We will limit ourselveshere to a brief review <strong>of</strong> some additional examplesinvolving cooperation and competition between <strong>the</strong>various launch companies. Cooperation between launchproviders <strong>of</strong> different nationality has so far beenlimited. A few examples <strong>of</strong> such arrangements:Lockheed Martin and <strong>the</strong> Russian manufacturers <strong>of</strong><strong>the</strong> Proton launcher, Khrunichev and Energia, jointlymarket <strong>the</strong> Proton through a U.S.-based firmInternational Launch Services (ILS). This arrangementhas had considerable advantages <strong>for</strong> both parties.Lockheed Martin added a reliable heavy-lift launcher toits Atlas and Titan launch vehicles, positioning itselfstrongly in <strong>the</strong> international market. The Russianlaunch firms not only got American international salesexperience to work <strong>for</strong> <strong>the</strong>m but also <strong>the</strong> interest <strong>of</strong> <strong>the</strong>latter in - and <strong>the</strong> ensuing domestic lobbying ef<strong>for</strong>ts<strong>for</strong> - having <strong>the</strong> restrictions <strong>of</strong> <strong>the</strong> U.S.-Russian launchtrade agreement lifted or at least fur<strong>the</strong>r liberalized.Boeing in <strong>the</strong> mean time took over McDonnellDouglas (MDD) and thus became a launch providerwith MDD’s successful medium-lift Delta launchfamily. To also enter <strong>the</strong> heavy-lift launch vehiclemarket, Boeing concluded an agreement with a Russian,Ukrainian and Norwegian firm to launch <strong>the</strong> UkrainianbuiltZenit from a movable plat<strong>for</strong>m in <strong>the</strong> PacificOcean. This project, Sea Launch, has already received<strong>the</strong> support through a bulk launch order from Hughes,and is at <strong>the</strong> time <strong>of</strong> writing close to its first commerciallaunch.Both arrangements involve an American companyselling <strong>for</strong>eign launch vehicles, which is ra<strong>the</strong>r neutralfrom a U.S. missile/launcher export control point <strong>of</strong>view. However, both U.S. companies have a clearinterest in guaranteeing, both vis-a-vis <strong>the</strong> insurers and<strong>the</strong> customers, <strong>the</strong> reliability <strong>of</strong> <strong>the</strong> launch vehicles<strong>of</strong>fered. That potentially raises transfer (“export”) <strong>of</strong>sensitive U.S. know-how concerns on <strong>the</strong> part <strong>of</strong> <strong>the</strong>U.S. government, and entails State Department controlson all discussions between <strong>the</strong> partners which couldamount to such transfers. The ‘China affair’ has led toincreased awareness and sharper controls, delaying <strong>the</strong>progress <strong>of</strong> <strong>the</strong> cooperation and <strong>the</strong> fur<strong>the</strong>rliberalization <strong>of</strong> <strong>the</strong> applicable launch trade agreements.Since a few years, Israel has been <strong>of</strong>fering its -partially successful- Shavit launch vehicle to <strong>the</strong> U.S.<strong>for</strong> <strong>the</strong> launch <strong>of</strong> government payloads. At <strong>the</strong> sametime, to overcome <strong>the</strong> handicaps <strong>of</strong> a small, largelylandlocked territory to launch from, it requestedpermission to per<strong>for</strong>m <strong>the</strong>se launches from U.S. launchfacilities. (The U.S. government, true to its nonproliferationand export control policies, had <strong>for</strong> yearsdelayed, but not been able to prevent, <strong>the</strong> development<strong>of</strong> this new launch vehicle). Recently, however, <strong>the</strong> U.S.Coleman Research Corporation has been able to builda Shavit-based launch vehicle with sufficient U.S.content to qualify, under <strong>the</strong> above fly U.S. policy, asa U.S. launch vehicle which can be used <strong>for</strong> <strong>the</strong> launch<strong>of</strong> government payloads. Coleman has in <strong>the</strong> mean timebeen selected, toge<strong>the</strong>r with Orbital SciencesCorporation, to per<strong>for</strong>m launches <strong>for</strong> NASA.13Brazil's development <strong>of</strong> an indigenous smallsatellite launch vehicle (VLS-1) started in <strong>the</strong> early1980's, <strong>for</strong> <strong>the</strong> purpose <strong>of</strong> having independent access tospace, a consideration that also underlay Europe’sdecision to build <strong>the</strong> Ariane. The construction <strong>of</strong> <strong>the</strong>VLS-1 was impeded, through <strong>the</strong> years, by MTCRbasednational controls complied with by both U.S. andl3The LK-0 launcher is being developed in <strong>the</strong> U.S. jointly byColeman Research and Israel Aircraft Industries; it has notflown yet, but <strong>the</strong> Shavit has been launched four times with onefailure. The NASA program concerned involves 16 future smallpayload launches valued at USD 400 million, see Space News(Nov 2, 1998) at 1 (‘P egasus, Shavit win big, but NASA shunsA<strong>the</strong>na”).