†1991 Timothy A. Brooks

† Associate, Ice Miller Donadio & Ryan, Indianapolis, Indiana. J.D. 1991, University of California Los Angeles; A.B., 1988 Dartmouth College. This comment received First Prize in the 1990 High Technology Law Journal Comment Competition. The competition was sponsored by the law firms of Cooley Godward Castro Huddleson & Tatum; Fenwick & West; Ware & Friedenrich; and Wilson, Sonsini, Goodrich & Rosati, all of Palo Alto, California. The author would like to thank Professors Rod Margo, Phillip Trimble, and Arthur Rosett of the UCLA School of Law and Professor William Alford of the Harvard Law School for their helpful comments and suggestions, Jerry Sully and the staff of the High Technology Law Journal for their additional assistance, and Kathy for her patience.

1. In the United States, the National Aeronautics and Space Administration (NASA) determined the course of development and contracted with the private sector for particular engineering and construction needs. Corcoran & Beardsley, The New Space Race, SCI. AM., July 1990 at 72, 74.

2. Katz, New Directions Needed in U.S. Space Policy, in INTERNATIONAL SPACE POLICY: LEGAL, ECONOMIC, AND STRATEGIC OPTIONS FOR THE TWENTIETH CENTURY AND BEYOND 47, 47-48 (D. Papp & J. McIntyre eds. 1987) [hereinafter INTERNATIONAL SPACE POLICY].

3. Jones, National Security, Technology Transfer Controls, and U.S. Space Policy, in INTERNATIONAL SPACE POLICY, supra note 2, at 65, 66.

4. See infra notes 120-29, 140 and accompanying text.

5. See generally, Logsdon, The Space Shuttle Program: A Policy Failure?, 232 SCIENCE 1099, 1100-1101 (1986).

6. Original 1972 operating cost estimates for the shuttle were $10.4 million per flight, or $160 per pound put in orbit. Id. at 1102. Those estimates have been drastically revised. More recent estimates of the cost of a shuttle mission dedicated specifically to commercial satellite launching run as high as $350 million per flight. Corcoran & Beardsley, supra note 1, at 74. The price per launch charged by NASA's commercial competitors ranges from the $50 million average of Arianespace, Comment, Legal Aspects of the Commercialization of Space Transportation Systems, 3 HIGH TECH. L.J. 99, 105 (1988), to the $125 million of Martin -Marietta, Kolcum, Commercial Titan Launch Vehicle Places Two Communications Satellites in Orbit, AVIATION WK. & SPACE TECH., Jan. 8, 1990, at 42-43. Foreign governmental launchers have been known to undercut commercial prices. See infra note 91. Even if NASA launches two satellites per shuttle flight, it will still have to justify the $50 million to $125 million premium per satellite by providing vastly superior service. If it cannot do so, it will have to recoup the shortfall by selling off ancillary services to the satellite launchers and other shuttle customers. Thus the shuttle cannot be competitive unless it charges rates below cost.

7. Corcoran & Beardsley, supra note 1, at 74-75.

8. See infra notes 46-65 and accompanying text.

9. Robinson & Meredith, Domestic Commercialization of Space: The Current Political Atmosphere, in 1 AMERICAN ENTERPRISE, THE LAW, AND THE COMMERCIAL USE OF SPACE 1, 4 (1986) [hereinafter AMERICAN ENTERPRISE]

10. Id.

11. Dula, Private Sector Activities in Outer Space, 19 INT'L LAW. 159, 183 (1985).

12. So long as government launchers are market leaders, pricing will not be indicative of costs, Hertzfeld, Economic, Market, and Policy Issues of International Launch Vehicle Competition, in INTERNATIONAL SPACE POLICY, supra note 2, at 203, 214, and commercial launchers will probably be forced to price at very low profitability in the short term in order to develop a capacity to compete in the long-term market.

13. One of the actions taken by the administration toward this end was the designation, by Executive Order 12465 on February 24, 1984, of the Department of Transportation as lead agency for the regulation of private ELV launching. The Department of Transportation then created the Office of Commercial Space Transportation to oversee its responsibilities. Robinson & Meredith, supra note 9, at 3.

14. Commercial Space Launch Act, Pub. L. No. 98-575, 98 Stat. 3055, amended by Commercial Space Launch Act Amendments of 1988, Pub. L. No. 100-657, 102 Stat. 3900 (codified as amended at 49 U.S.C. §§ 2601-2623 (1988)).

15. 49 U.S.C. §§ 2605-2613 (1988).

16. Id. § 2615.

17. Id. § 2614.

18. Id. See infra note 315 and accompanying text.

19. Commercial Space Launch Act, Pub. L. No. 98-575, § 16, 98 Stat. 3055 (1984).

20. Id., as amended by Commercial Space Launch Act Amendments of 1988, Pub. L. No. 100-657, § 5, 102 Stat. 3900, 3902 (codified as amended at 49 U.S.C. § 2615 (1988)).

21. 49 U.S.C. § 2615(a)(1)(A) (1988).

22. Id. § 2615(a)(1)(D).

23. See infra note 62 and accompanying text.

24. See infra notes 181-82 and accompanying text.

25. Commercial Space Launch Act Amendments of 1988, Pub. L. No. 100-657, § 10, 102 Stat. 3900, 3907 (1988).

26. 49 U.S.C. § 2614(a), (b) (1988).

27. Id. § 2614(b)(1). The Air Force's draft agreement for commercial use of government launch facilities was assaulted at House hearings by the commercial launch industry as overly burdensome. State of the Commercial Launch Industry: Hearings Before the Subcomm. on Space Science and Applications of the House Comm. on Science, Space, and Technology, 100th Cong., 1st Sess. (1987) [hereinafter Hearings]. The Air Force has since produced another draft of its agreement. Department of the Air Force, Model Expendable Launch Vehicle Commercialization Agreement: Revision Two (May 12, 1989). For a discussion of the original model agreement, see Comment, supra note 6, at 116.

28. See OFFICE OF TECH. ASSESSMENT, LAUNCH OPTIONS FOR THE FUTURE x (1988).

29. Comment, supra note 6, at 103.

30. The United States has not announced a policy with respect to providing commercial services of which only the space shuttle is capable, such as satellite recovery.

31. Kolcum, Joint Atlas Centaur Mission Orbits FltSatCom Spacecraft, AVIATION WK. & SPACE TECH., Oct. 2, 1989 at 23 (reporting launch of last government-commercial joint venture).

32. Reynolds & Merges, Toward an Industrial Policy for Outer Space: Problems and Prospects of the Commercial Launch Industry, 29 JURIMETRICS J. 7, 13 (1988).

33. The first successful commercial launch was the launch of a Delta from Cape Canaveral on August 27, 1989. Kolcum, U.S. Reenters Commercial Launch Arena With Private Delta Mission, AVIATION WK. & SPACE TECH., Sept. 4, 1989, at 24.

34. OFFICE OF TECH. ASSESSMENT, INTERNATIONAL COOPERATION & COMPETITION IN CIVILIAN SPACE ACTIVITIES 104-06. (1985).

35. Corcoran & Beardsley, supra note 1, at 74-75.

36. The capacity of the Atlas to GTO is 2250 kg. Corcoran & Beardsley, supra note 1, at 75. The Atlas is an adequate competitor for single satellite launches, but is not large enough to handle double payloads. General Dynamics plans to produce Atlas rockets at the rate of eight per year through 1997, and has commitments to launch about half of them. Kolcum, supra note 31, at 23.

37. The payload capacity to GTO of the Delta II is 1800 kg, Corcoran & Beardsley, supra note 1, at 75, which might not be sufficient as demand in the 1990's shifts to larger satellites, see Dornheim, Near-Term Launch Market Looks Bright, but Questions Remain on Future Prospects, AVIATION WK. & SPACE TECH., Dec. 19, 1988, at 73. It has a fine record of success with 11 launches in 1990. Laurels 1990, AVIATION WK. & SPACE TECH., Jan. 7, 1991, at 11, 12.

38. The Commercial Titan has a payload capacity of 5625 kg to GTO, three times that of the Delta and more than twice that of the Atlas. Corcoran & Beardsley, supra note 1, at 75. Martin-Marietta has successfully launched two out of three Commercial Titans. Kolcum, Intelsat F6 Orbited by Commercial Titan Will Ease Communications Congestion, AVIATION WK. & SPACE TECH., July 2, 1990, at 25.

39. Kolcum, supra note 6, at 42, 43. The Titan's payload capacity to low Earth orbit (LEO) is 14,400 kg (17,700 kg for the Titan IV), Corcoran & Beardsley, supra note 1, at 75, which makes the Commercial Titan an attractive alternative to the space shuttle for lifting such large payloads as components of the space station, Kolcum, supra note 6, at 42-43.

40. The Air Force has given Martin-Marietta a firm commitment for 41 launches in the 1990's. Corcoran & Beardsley, supra note 1, at 75.

41. Single Atlas to Launch Three Small Satellites, AVIATION WK. & SPACE TECH., Mar. 26, 1990, at 24.

42. See infra notes 125-29 and accompanying text.

43. Reynolds & Merges, supra note 32, at 17.

44. R. Truly, SPACE SHUTTLE: THE JOURNEY CONTINUES 17 (1988).

45. See Asker, Failure to Support Space Ventures Threatens U.S. Aerospace Industry, AVIATION WK. & SPACE TECH., May 28, 1990, at 22.

46. E'Prime is hoping to use Peacekeeper missiles as the basis for its launch system. Corcoran & Beardsley, supra note 1, at 82-84.

47. Conatec is offering suborbital launches of sounding rockets to carry microgravity experiments. Hearings, supra note 27, at 16 (statement of Eugene Kadar, President of Conatec).

48. SSI was the first small company to demonstrate its launch capabilities with a suborbital flight of its Conestoga rocket in 1982. Corcoran & Beardsley, supra note 1, at 82. SSI has not yet had a successful test flight of a booster capable of putting a payload into LEO.

49. Amroc, previously known as Starstruck, has had great difficulty in developing its own rocket. Dornheim, Amroc Retains Key Personnel Despite Cutbacks After Pad Fire, AVIATION WK. & SPACE TECH., Oct. 30, 1989, at 20. However, Amroc is continuing to develop its new Aquila booster. Marketing efforts are under way and Amroc anticipates testing Aquila within the next few years, with commercial launches to follow shortly. Telephone interview with James Bennett, President of the American Rocket Company (Apr. 15, 1991).

50. The company's Pegasus rocket has been launched twice from an airborne B-52. Second Pegasus Launched Successfully; Small Satellites in Elliptical Orbit, AVIATION WK. & SPACE TECH., July 22, 1991, at 24. For Pegasus to be commercially viable, OSC/Hercules must obtain a commercial aircraft since the B-52 is available only for governmental launches. Stavro, Virginia Firm Uses a B-52 to Launch Satellites, L.A. Times, Apr. 6, 1990, at D1, D7. Orbital Sciences has managed to capture one commercial payload already; Sweden has chosen Pegasus for its December 1992 launch of its 230 kg Freja satellite. Sweden Reserves Space on Pegasus for Payload First Booked on Long March, AVIATION WK. & SPACE TECH., Jan. 1, 1990, at 38 [hereinafter Sweden Reserves Space].

51. The Scout has a payload capacity of 215 kg to LEO. Corcoran & Beardsley, supra note 1, at 74. It had been launched 112 times through the end of 1988, with a 95.5% success rate. Scott, Small-Payload Launch Companies Struggle to Define Their Market, AVIATION WK. & SPACE TECH., Dec. 19, 1988, at 79, 82.

52. See Reynolds & Merges, supra note 32, at 17.

53. See supra note 50.

54. Sea launching, used for ballistic missiles, had never before been used to launch a rocket into space. Martin, Space, Inc., SCI. DIG., March 1985, at 43, 49.

55. Reynolds & Merges, supra note 32, at 17. See also Kolcum, supra note 31.

56. Many of the small payload companies do, however, receive some form of government support. Scott, supra note 51, at 79.

57. Sweden Reserves Space, supra note 50, at 38.

58. Pegasus Maker Readies Pacific Sales Push, AVIATION WK. & SPACE TECH., Feb. 11, 1991, at 26.

59. OFFICE OF TECH. ASSESSMENT, supra note 34, at 121.

60. Asker, Orbital Sciences Becomes First Commercial Space Firm to Go Public, AVIATION WK. & SPACE TECH., Apr. 30, 1990, at 27.

61. Asker, supra note 45, at 23.

62. Asker, Insurance Will Cost More, but Little Movement is Seen to U.S. Launchers, AVIATION WK. & SPACE TECH., Mar. 5, 1990, at 21.

63. See Corcoran & Beardsley, supra note 1, at 84.

64. See infra note 128.

65. See infra note 127.

66. OFFICE OF TECH. ASSESSMENT, supra note 34, at 125.

67. See Levine, Commercialization of Space: Implications for U.S. Relations with Developing Countries, in INTERNATIONAL SPACE POLICY supra note 2, at 119, 119-20.

68. CONGRESSIONAL BUDGET OFFICE, SETTING SPACE TRANSPORTATION POLICY FOR THE 1990'S 12 (1986).

69. Id. at 23. Original NASA estimates predicted that foreign launchers would capture only 25% of the total world market because of shuttle dominance. Due to the Challenger launch standdown, the figure is well over 50%, and the shuttle's share of commercial business is non-existent. Id.

70. See Johnson-Freese, High Tech, High Cost: Reasons for Cooperation in Space?, in INTERNATIONAL SPACE POLICY supra note 2, at 217, 221-25 (discussing U.S.-European cooperative space efforts).

71. See id. at 224. The criticism is at times quite vocal. Charles Bigot, the managing director of Arianespace described NASA's approach to clients as that of "a lord accepting peasants on his land." Corcoran & Beardsley, supra note 1, at 75.

72. OFFICE OF TECH. ASSESSMENT, supra note 34, at 111-16. Although still substantially owned by the various European national space agencies, id., Arianespace has been run as an independent corporation, keeping the ESA out of the day-to-day administration of the launch business, Corcoran & Beardsley, supra note 1, at 74-75.

73. Johnson-Freese, supra note 70, at 224.

74. Arianespace launched its first commercial rocket, an Ariane 1, on May 23, 1984, OFFICE OF TECH. ASSESSMENT, supra note 34, at 110, giving NASA its first legitimate competitor. Arianespace now uses the Ariane 4, which is capable of carrying up to 4200 kg to GTO. Corcoran & Beardsley, supra note 1, at 75. The location of its Kouro, French Guiana facility near the equator gives Arianespace an advantage in lifting payloads into some orbits. CONGRESSIONAL BUDGET OFFICE, supra note 68, at 30-33.

75. Lenorovitz, Inquiry Team Probes Cause of Ariane First-Stage Failure, AVIATION WK. & SPACE TECH., Mar. 5, 1990, at 18, 19.

76. Lenorovitz, Ariane V44 Mission Delayed For Third-Stage Modification, AVIATION WK. & SPACE TECH., June 3, 1991, at 21.

77. Arianespace Expects to Sign New Launch Contracts Despite V36 Launch Failure, AVIATION WK. & SPACE TECH., Mar. 19, 1990, at 191 [hereinafter New Launch Contracts].

78. Arianespace Racks up Launch Business: Ariane 5 Set for Launch in 1995 (advertiser sponsored market supplement), AVIATION WK. & SPACE TECH., Nov. 27, 1989, at S4.

79. Raclin, Going to Work in Space: A Survey of Presently Available Launch Systems, 1 AMERICAN ENTERPRISE, supra note 9, at 30, 47. Practices similar to these ultimately led Transpace Carriers, Inc. to pursue Section 301 relief based on allegations of two-tier pricing. Id. See also infra notes 261-65 and accompanying text.

80. Ariane Will Broaden Launch Services to Counter Competition, AVIATION WK. & SPACE TECH., Sept. 3, 1990, at 100.

81. Arianespace has such a strong international reputation among launch services customers that its February 22, 1990 failure did not impair any of its current contract negotiations. Arianespace concluded an important contract with Hughes Communications, Inc., one of the leaders in satellite production, immediately following the failure. New Launch Contracts, supra note 77, at 191. Recent Arianespace innovations include the development of a small payload module. Lenorovitz, Commercial Flight Slots Offered for Auxiliary Payloads on Ariane, AVIATION WK. & SPACE TECH., Feb 5, 1990, and the Ariane 5, which represents a 50% increase in capacity to GTO over its predecesor, the Ariane 4, R. TRULY, supra note 45, at 16. This development will also allow Arianespace to be more competitive with the Titan in the market for very large satellites. See supra notes 39-40 and accompanying text.

82. OFFICE OF TECH. ASSESSMENT, supra note 34, at 122.

83. Bristol had planned to develop a rocket capable of carrying 8000 pounds to LEO and 1700 pound to GTO by 1988. Id.

84. Hughes, Soviet-Canadian Joint Venture to Design, Launch Satellites, AVIATION WK. & SPACE TECH., Nov. 12, 1990, at 77, 79.

85. OFFICE OF TECH. ASSESSMENT, supra note 34, at 120.

86. Id. The H-II will have the capability to lift a 2000 kg satellite to GTO, as compared with around 500 kg for the H-I. Swinbanks, Engine Problems Shake Japan's Space Plans, 340 NATURE 253 (1989).

87. Swinbanks, supra note 86, at 253. Recent problems with the engines of the H-II, have led to the delay of its first launch by a year. Japanese Consider Further Changes in H-2 Booster's Rocket Engine, AVIATION WK. & SPACE TECH., Oct. 15, 1990, at 30. Shortly after the H-II is ready, it will be complemented by reentry module currently under development. The module, which will allow an 800 kg payload to be exposed to up to seven days of microgravity before being returned to Earth, will give Japan an advantage in materials processing and with scientific customers. Japan Reschedules H-1 Mission After Launch Pad Abort, AVIATION WK. & SPACE TECH., Sept. 4, 1989, at 23.

88. Swinbanks, First Setback for Japan, 340 NATURE 493 (1989).

89. OFFICE OF TECH. ASSESSMENT, supra note 34, at 120.

90. The Long March 3 has a payload capacity of 1400 kg to GTO, and the Long March 4 a capacity of 2500 kg into sun synchronous orbit. Corcoran & Beardsley, supra note 1, at 75. As for reliability, the Chinese claim that the Long March family of boosters has produced only two failures in twenty-two launches, the last in January 1984. Proctor, China Returns Salvaged Spacecraft to Orbit, AVIATION WK. & SPACE TECH., Apr. 16, 1990, at 25.

91. The price for the April 7, 1990 launch by the Long March of the Asiasat 1 communications satellite was also approximately $30 million. Proctor, supra note 90, at 28. This price was probably introductory in nature.

92. Id. at 28.

93. See infra notes 272-314 and accompanying text.

94. Chinese Deal to Launch Arabsat Renews U.S. Concerns About Long March Pricing, AVIATION WK. & SPACE TECH., Apr. 9, 1990, at 25 [hereinafter Chinese Deal to Launch Arabsat]. The Department of Transportation believes that the American commercial market cannot bear more than the nine allotted Chinese launches without crossing the "pain threshold." Id. See also infra note 265 and accompanying text.

95. As of 1989, the Soviets had launched a total of nine foreign satellites: four Indian, three French, and one each for Czechoslovakia and Bulgaria. GLAVKOSMOS, COMMERCIAL USES OF SPACE EXPLORATION 12 [author's pagination, actual pages not numbered] (1989) (Glavkosmos marketing brochure)

96. The Soviets first bid to provide commercial launch services for the launch of the Inmarsat communications satellite occurred in 1983. OFFICE OF TECH. ASSESSMENT, supra note 34, at 117.

97. This is because of the "China Green Line," discussed infra at note 297.

98. Already a German firm has taken advantage of Glavkosmos' low rates to launch the first of a series of five experiments on a Soviet Proton, and the Energetics Corporation of the U.S. has responded to flexible terms by Glavkosmos by concluding a $54 million agreement to carry up to eight Energetics experiments as secondary payloads on future Proton launches. Asker, Glavkosmos Signs Energetics as First U.S. Launch Customer, AVIATION WK. & SPACE TECH., Nov. 20, 1989, at 40.

99. In addition to the Proton, which is capable of launching 21,000 kg into LEO, and 2200 kg to GTO, the Soviets are also offering for commercial launches the Vostock booster (for sun-synchronous payloads up to 1840 kg), the Soyuz (for LEO payloads up to 6900 kg), the Molnia (to place payloads of up to 1800 kg into highly elliptical orbits), and the Tsiklon (4000 kg to LEO). GLAVKOSMOS, supra note 95, at 13-21. The Soviets also possess the largest available rocket, the Energia, which can launch up to 105 metric tons to LEO. Corcoran & Beardsley, supra note 1, at 74-75.

100. The Energia arm of the Soviet space program is mounting a marketing campaign parallel to that of Glavkosmos. Energia Group Offers Commercial Services, AVIATION WK. & SPACE TECH., Sept. 18, 1989, at 28. Energia offers the use of the Mir space station, as well as Soyuz manned flights and long-duration missions. Id. Soviet advantages in this area include human monitoring and adjustment of experiments as they progress, as well as a four-day turnaround from when an experiment is delivered in Moscow until it is unpacked on the Mir station, which could be a tremendous advantage for less stable payloads. GLAVKOSMOS, supra note 95, at 30-37.

101. See Asker, Crystal Experiments on Mir Signal Soviet Commercial Space Push, AVIATION WK. & SPACE TECH., Apr. 2, 1990, at 28. The Soviets are building on their already formidable advantage in materials processing by adding a large new materials processing module to the Mir station. Covault, Soviet Mir Cosmonauts Await Launch of Large Materials Processing Module, AVIATION WK. & SPACE TECH., Apr. 23, 1990, at 27.

102. Laser-for-Burger Swaps, ECONOMIST, Mar. 3, 1990, at 78, 80. This type of launcher presents an interesting dilemma for regulating trade in launchers, since the launcher would be moving through international commerce as a good rather than as a service. See generally infra notes 204-70 and accompanying text.

103. The Soviets have already increased the vertical integration of information within their space program. Lenorovitz, Soviet Space Program Reflects New Policies Initiated by Gorbachev, AVIATION WK. & SPACE TECH., Dec. 18, 1989, at 52, 57. This openness will lead to better quality control and more comprehensive decision making. Id.

104. OFFICE OF TECH. ASSESSMENT, supra note 34, at 120.

105. Although Brazil had successfully launched 130 pounds aboard its Sonda III rocket to an altitude of 380 miles on a suborbital flight, id., its program has progressed little since that time, Neto, Brazil's Two-Thirds VLS Success, 339 NATURE 329 (1989).

106. See Neto, supra note 105, at 329; Jayaraman, Indian Launch Vehicle Grounded, 340 NATURE 587 (1989).

107. Brazil has already shown this inclination, preferring to wait for the development of an indigenous launcher before launching its already completed Data Collection Satellite (SCD-1). Neto, supra note 105, at 329.

108. In addition to Brazil and India, 13 developing or newly industrialized countries (Argentina, Egypt, Indonesia, Iraq, Israel, Libya, Mexico, Pakistan, Peru, the Philippines, South Africa, South Korea, and Taiwan) have rocket development programs driven by the desire to gain prestige through technological independence, and in many cases by the desire to improve national security. Karp, The Commercialization of Space Technology and the Spread of Ballistic Missiles, in INTERNATIONAL SPACE POLICY, supra note 2, at 179, 181.

109. See Smith, Scud Propulsion Designs Help Patriot System Succeed, AVIATION WK. & SPACE TECH., Jan. 28, 1991, at 28.

110. The spaceport will be available to all launchers. The Soviet Union is particularly interested in the Cape York program because it provides access to equatorial launching, which is less expensive. The Soviets were scheduled to begin launches in 1992, but the program ran into trouble when Australia was told by COCOM (the NATO Coordinating Committee on East-West trade policy) that any use of the facility by the Soviets might prevent its use by COCOM members, due to concerns over technology transfer. Ewing, Queensland's Space Base Threatened, 339 NATURE 650 (1989). The project depends a great deal on the accession of U.S. policymakers, as the denial of export licenses for either construction equipment or satellites could prove fatal to the project. Asker, Australians Pitch Cape York Complex as Best Way to Ease Soviets into Launch Market, AVIATION WK. & SPACE TECH., Apr. 9, 1990, at 25. There has been some progress: on August 22, 1990, President Bush authorized the State Department to allow an American company's satellites to be launched at Cape York. President Authorizes U.S. Participation in Australian-USSR Space Launch Venture, 7 Int'l Trade Rep. 1326 (Aug. 29, 1990) [hereinafter President Authorizes U.S. Participation].

111. New Spaceport to Conduct First Launch from Mexico, AVIATION WK. & SPACE TECH., June 3, 1991, at 21.

112. This Comment includes in the public sector of demand only those countries that are able to provide their own launch services and thus avoid seeking launch services on the commercial launch market. The demand of those countries which do not possess launch capabilities are included in commercial demand.

113. OFFICE OF TECH. ASSESSMENT, supra note 34, at 122.

114. See Logsdon, supra note 5 (discussing the various considerations, including cost, in developing the space shuttle as the United States' primary launch vehicle).

115. Indeed, the United States pursued this policy of using governmental payloads to subsidize the commercial prices charged by NASA to maintain its market share in the face of competition from Arianespace. Logsdon & Williamson, U.S. Access to Space, SCI. AM., Mar. 1989, at 34, 35.

116. OFFICE OF TECH. ASSESSMENT, supra note 34, at 67. Maintaining a launch system regardless of its cost to the governmental users is also thought to be necessary to achieve technological synergies. Hertzfeld, supra note 12, at 206.

117. The Moon is Made of Gold, in The Uses of Heaven, ECONOMIST, June 15, 1991, Supp. at 6.

118. See, e.g., supra note 40 (U.S. Air Force's contracts with Martin-Marietta).

119. CONGRESSIONAL BUDGET OFFICE, supra note 68, at 30-31. Similar savings are also expected for Arianespace, however. See supra note 78 and accompanying text.

120. Of the 136 satellites launched in 1989, only 16 were commercial. International Space: Teaming Spurs New Growth (advertiser sponsored market supplement), AVIATION WK. & SPACE TECH., Mar. 12, 1990, at S1 [hereinafter International Space].

121. Hertzfeld, supra note 13, at 208.

122. See generally Kwerel & Pitsch, FCC Regulation of International Telecommunications Satellites and Cables, in 2 AMERICAN ENTERPRISE, supra note 9, at 119, 119-41.

123. Id. at 122.

124. American companies produced nearly 70% of all communications satellites from 1980 to 1989, and are expected to continue with a market share of around 60% for 1990 to 1995. Business as Usual, in The Uses of Heaven, supra note 117 at 8.

125. See International Space, supra note 120, at S10.

126. Though originally a governmental activity, remote sensing has begun commercialization with the privatization of Landsat and the development of the French SPOT system. See generally Henderson, Private Sector Satellite Remote Sensing: Barriers to Commercialization, in 2 AMERICAN ENTERPRISE, supra note 9, at 79. Other such systems are under development, Uhlir, The Public International Law of Civilian Remote Sensing: An Overview, in 2 AMERICAN ENTERPRISE, supra note 9, at 25, 65, but it remains to be seen how much additional demand this will create. The real potential for commercialization in remote sensing is in interpretation of data, rather than in the launching of new satellites. The View from Nowhere, in The Uses of Heaven, supra note 117, at 16, 18.

127. Experiments in materials processing can make use of short-term microgravity available from re-entry modules. Corcoran & Beardsley, supra note 1, at 85. OSC recently launched its first Prospector rocket, which though a failure was aimed specifically at providing microgravity for small companies and universities. See Orbital Sciences Team Seeks Cause of Prospector Rocket Launch Failure, AVIATION WK. & SPACE TECH., June 24, 1991, at 30. Materials processing still involves a great deal of government activity, OFFICE OF TECH. ASSESSMENT, supra note 34, at 419, but is becoming accessible at relatively low cost for small scale commercial applications. Id. at 340.

128. "Lightsat" systems use a large number of small satellites in low earth orbit, rather than one expensive satellite in geosynchronous orbit. See International Space, supra note 120, at S1.

129. See Klass, Motorola's Iridium Satellite System Could Serve Aviation Market, AVIATION WK. & SPACE TECH., June 3, 1991, at 80, 80-81.

130. Arianespace launched 30 satellites for American customers from 1980 to 1990, as compared to 27 launches for European customers by the three main American launchers. The Moon is Made of Gold, supra note 117, at 6. Of third market customers Arianespace launched 16 satellites as opposed to 11 launched by the Delta, Atlas and Titan. Id.

131. The official government projections for launch demand predicted huge increases in the late 1980's giving way to a steady high demand market in the 1990's. CONGRESSIONAL BUDGET OFFICE, supra note 68, at 7. Demand was measured in these projections in "shuttle equivalents" (50,000 pounds to LEO), with most commercial ELVs carrying between .25 and .7 shuttle equivalents. Id. at 6. From a total U.S. demand of 12 shuttle equivalents in the 1980's projections quickly rose to more than 30 in 1989, and then hovered around 30 throughout the 1990's. Commercial demand was put at between 5 and 9 shuttle equivalents per year through 2000. Id. at 7-9.

132. CONGRESSIONAL BUDGET OFFICE, supra note 68, at 10-11.

133. This is because government demand, which is not very price responsive, makes up such a large component of overall demand. Hertzfeld, supra note 12, at 214.

134. See Dornheim, supra note 37, at 76.

135. See Hertzfeld, supra note 12, at 209. Alternatives to launching new satellites are being considered even for such obviously space-bound applications as weather satellites. The Commerce Department is considering the use of existing European or Japanese weather satellites rather than launching a new one. Asker, NOAA and Congress Ponder Backups for Troubled Weather Satellites, AVIATION WK. & SPACE TECH., June 15, 1991, at 22, 22-23.

136. International Space, supra note 120, at S4. Arianespace has proffered similar estimates of demand in its "nominal" case of 15-19 launches per year and its "maximum" case of 18-24 per year. New Launch Contracts, supra note 77, at 191.

137. Dornheim, supra note 37, at 73.

138. CONGRESSIONAL BUDGET OFFICE, supra note 68, at 24.

139. See supra notes 89-103 and accompanying text; infra notes 272-314 and accompanying text.

140. See supra notes 46-65 and accompanying text. The remote sensing market is already fairly saturated with services available from the United States' Landsat, French SPOT, and Soviet Meteor, and many other countries are developing systems of their own. Uhlir, supra note 126, at 65. The potential of materials processing is very hard to predict. The time to develop technologies are quite long and many of the improvements developed in space are at least partially effective on Earth, reducing the need for further launches to microgravity. See Hertzfeld, supra note 12, at 209-11. In any event, materials processing is unlikely to blossom into a mature technology until the space station is completed, though the commercial use of the Soviet Mir station, see supra note 100, could give some corporations a head start. Although transmission from direct broadcasting satellites (DBS) is expected to increase, the actual number of satellites in use is expected to grow relatively slowly. Dornheim, Mass Market for Satellites to Be Tested over Next Decade, AVIATION WK. & SPACE TECH., Mar. 19, 1990, at 189.

141. As insurance costs become a greater part of the total cost of launching, low launch prices will not have the same inducement if a launcher is labelled as a bad insurance risk. See supra note 62 and accompanying text.

142. Henderson, Sandia Researchers Test 'Coil Gun' for Use in Orbiting Small Payloads, AVIATION WK. & SPACE TECH., May 7, 1990, at 88, 88-89.

143. The Air Force is currently developing its Advanced Launch System (ALS) that would carry heavy payloads into LEO for a cost of around $300 per pound. Logsdon & Williamson, supra note 115, at 40. It will in no event be developed before the beginning of the next century. Id. The ALS might make it possible to ferry satellites to the space station at very low cost and then launch them to geosynchronous orbit from from there. Id. If this proves feasible, the market for single payload launchers could evaporate.

144. See supra notes 79, 91, 94, and accompanying text.

145. See CONGRESSIONAL BUDGET OFFICE, supra note 68, at 45. The government itself uses the cost advantages of ELVs. Kolcum, U.S. Maintains Busy Manifest of Manned, Unmanned Launches, AVIATION WK. & SPACE TECH., Mar. 19, 1990, at 182, 184.

146. CONGRESSIONAL BUDGET OFFICE, supra note 68, at 48-49.

147. See supra note 6 and accompanying text. However, NASA could efficiently sell excess capacity on governmental shuttle missions since the capacity would otherwise be wasted. Covault, Spacelab Flight Carries 2.5 Tons of Getaway Payloads, AVIATION WK. & SPACE TECH., June 24, 1991, at 57. The Columbia recently carried several small payload "Getaway Specials" on its Spacelab mission. Id.

148. See Kolcum, NASA Due for Organizational Changes to Meet Aerospace Demands of 1990's, AVIATION WK. & SPACE TECH., Dec. 24, 1990, at 52.

149. Id.

150. Even if the space shuttle remains 98% reliable, there is a 72% chance that at least one orbiter will be lost before assembly of the space station begins in 1995, according to the Office of Technology Assessment. Covault, Panel Calls Shuttle Accident 'Likely' Unless Propulsion Systems Redesigned, AVIATION WK. & SPACE TECH., Apr. 23, 1990, at 21.

151. The United States lost full access to space for nearly three years following the Challenger accident. Logsdon & Williamson, supra note 115, at 34.

152. See generally Cohen & Noll, Government R&D Programs for Commercializing Space, 76 AM. ECON. REV. 269 (1986). There are arguments that any commercial R&D by government is inefficient. Since members of Congress are interested in getting reelected, they are often motivated by a desire to see jobs produced in their districts before the next election, rather than by any interest in the long-term goals of the project. Id. at 270. Government programs also tend to be slower and more complicated, since they attempt to solve many problems with one program. The Moon is Made of Gold, supra note 117, at 6-7.

153. See Reynolds & Merges, supra note 32, at 27.

154. See, e.g., Reich, Making Industrial Policy, 60 FOREIGN AFF. 852 (1982).

155. Whereas industries with primarily commercial applications are generally ignored by the United States government, those related to national security have enjoyed strong support. Id. at 864-65.

156. Reynolds & Merges, supra note 32, at 27-28.

157. Reynolds, Space Law in the 1990's: An Agenda for Research, 31 JURIMETRICS J. 1, 8 (1990).

158. R. NELSON, HIGH-TECHNOLOGY POLICIES: A FIVE NATION COMPARISON 52 (1984).

159. See id. at 51.

160. Mowery & Rosenberg, The Commercial Aircraft Industry, in GOVERNMENT & TECHNICAL PROGRESS: A CROSS-INDUSTRY ANALYSIS 101, 131 (R. Nelson ed. 1982). Through this program, Boeing was transformed from an extremely minor player in commercial aviation before 1958 into the dominant international producer of commercial jet aircraft today. Id. at 111.

161. See R. NELSON, supra note 158, at 51-57.

162. Reynolds & Merges, supra note 32, at 35-36 n.92.

163. The Air Force's Advanced Launch System, see supra note 143, could fill this role quite nicely.

164. Such a policy has benefitted both the railroads, through the granting of rights of way, Reynolds & Merges, supra note 32, at 30, and the housing and automobile industries through the construction of the interstate highway system, Reich, supra note 154, at 880.

165. These are the Kennedy Space Center in Florida and Vandenberg Air Force Base in California. W. VON BRAUN, F. ORDWAY & D. DOOLING, SPACE TRAVEL: A HISTORY 242, 244 (4th ed. 1985).

166. See supra notes 131-37 and accompanying text.

167. The government has already taken action to standardize the availability of government launch sites with the Air Force's Model Expendable Launch Vehicle Commercialization Agreement (2d rev., May 12, 1989). See supra notes 26-27 and accompanying text. The most recent amendments to the Commercial Space Launch Act direct the Secretary of Transportation to encourage public-private partnerships in improving and expanding the space launch infrastructure. Pub. L. No. 101-611 § 117(e)(3), 104 Stat. 3188, 3203 (1990), 49 U.S.C.A. § 2604(a)(3) (West Supp. 1991).

168. See Hertzfeld, supra note 12, at 206.

169. Building new launch sites could easily run into the billions of dollars. Hearings, supra note 27, at 317. Cf. Kolcum, Titan Launch Complexes Being Rebuilt to Meet Target Date for Mars Observer, AVIATION WK. & SPACE TECH., Feb. 4, 1991, at 53 (renovation of a launch complex is a $300 million project).

170. See supra note 26 and accompanying text.

171. Convention on International Liability for Damage Caused by Space Objects, Mar. 29, 1972, 24 U.S.T. 2389, T.I.A.S. 7762.

172. 49 U.S.C. § 2613 (1988).

173. Mowery & Rosenberg, supra note 160, at 140-41. The McNary-Watres Act of 1930 helped airlines to purchase faster planes by rewarding carriers that used radios, multi-engine aircraft and other innovations. Id.

174. Space systems is one area of the military budget that has heretofore escaped major budget cuts, and the military is preparing to launch its next generation of surveillance satellites during the 1990's. Smith, U.S. Military to Increase Reliance on Space Systems in Coming Decade, AVIATION WK. & SPACE TECH., Mar. 19, 1990, at 187, 187-188. Since the Air Force is presently using only the Titan IV, however, the benefits of increased defense satellite usage might accrue only to Martin-Marietta. See supra notes 39-40 and accompanying text.

175. See supra note 117 and accompanying text. A similar advantage allowed government demand to drive the American aircraft industry but not that of the Japanese. R. NELSON, supra note 158, at 57.

176. Bush Issues Policy Directing Agencies to Focus on Commercial Space Industry, 7 Int'l Trade Rep. (BNA) 1371 (Sept. 12, 1990) [hereinafter Bush Issues Policy].

177. Asker, Demand for Space Products, Services Grows at Healthy Rate, AVIATION WK. & SPACE TECH., May 28, 1990, at 51.

178. See Dula, supra note 11, at 186. For a discussion of the effects of the investment incentives of the Economic Recovery Act of 1981, see Thorning, Investment Incentives: Do They Work?, 31 TAX NOTES 515 (1986).

179. Efforts to increase profitability are generally framed as the removal of restrictions from the targeted industry, but these efforts do not necessarily lead to the savings being channeled into the improvement of profitability. Reich, supra note 154, at 857-59.

180. Reynolds & Merges, supra note 32, at 30-31.

181. Convention Relating to International Transportation by Air. October 12, 1929, 49 Stat. 3000, T.S. No. 876, 2 Bevans 983, 137 L.N.T.S. 11, reprinted in 49 U.S.C. § 1502 (1988) (international aviation).

182. 42 U.S.C. § 2210 (1988) (nuclear power accidents).

183. 49 U.S.C. § 2615 (1988). See supra note 22 and accompanying text.

184. For a discussion of the ability of antitrust exemptions to encourage innovation, see Jorde & Teece, Innovation, Cooperation and Antitrust, 4 HIGH TECH. L.J. 1 (1989).

185. Mowery & Rosenberg, supra note 160, at 113.

186. The Bush Administration recently sacked Craig Fields, the director of the Defense Advanced Research Projects Agency (DARPA), allegedly because he took an overly interventionist position on industrial policy and the role of government in United States technological development. His position reportedly ran afoul of the free market instincts of Budget Director Richard Darman and Chief Economic Adviser Michael Boskin. Beheaded, ECONOMIST, Apr. 28, 1990, at 27.

187. Asker, Bush Lobbies Congressional Leaders for Support of U.S. Civil Space Efforts, AVIATION WK. & SPACE TECH., May 7, 1990, at 31.

188. Bush Issues Policy, supra note 176, at 1371. Others have called for a cabinet level Department of Air and Space. See Engen, New Air and Space Dept. Would Speed Progress Toward Meeting 21st Century Goals, AVIATION WK. & SPACE TECH., Dec. 10, 1990, at 78, 78-79.

189. Florida Leads Effort to Organize States with Stakes in Commercial Space, AVIATION WK. & SPACE TECH., Sept. 17, 1990, at 41. In addition to Florida, representatives from the state governments of Alabama, California, Colorado, Hawaii and Virginia attended the Association's first meeting on July 31, 1990. Id. Other states, particularly Ohio, Texas, and Utah, have been invited to participate in future meetings. Id.

190. U.N. Reg. No. 22380, reprinted in 13 INT'L LEGAL MAT. 910-948 (1974) [hereinafter UNCTAD Code of Conduct]. As of December 1988, seventy-seven countries had signed, acceded to, or in some way approved of the Code of Conduct. These included the Soviet Union, the United Kingdom, Germany, India, and Brazil, but not the United States or Japan. UNITED NATIONS, MULTILATERAL TREATIES DEPOSITED WITH THE SECRETARY GENERAL (Status as of December 1988) (1989).

191. The International Air Transport Association (IATA) was set up as an "operators" conference similar to UNCTAD liner conferences. P. HAANAPPEL, PRICING AND CAPACITY DETERMINATION IN INTERNATIONAL AIR TRANSPORT: A LEGAL ANALYSIS 13-14, 18 (1984).

192. Raclin, supra note 79, at 52 n.83.

193. Jiefang, Toward a Regulatory Regime for Competition in Space Transport, in SPACE LAW: VIEWS OF THE FUTURE 57 (T. Zwaan ed. 1988).

194. Id.

195. Once launchers begin carrying cargo and passengers to particular points in space, rather than simply into orbit, the analogy might be closer. Countries might want to impose capacity controls on service to their space stations and lunar bases to assure full utilization of capacity. Id. at 60-62. Even this scenario is a long way off, however, since it assumes low marginal costs and excess cargo capacity. At least with regard to lunar bases, capacity controls might be in violation of the Outer Space Treaty. Multilateral Treaty on the Exploration and Use of Outer Space, Jan. 27, 1967, 18 U.S.T. 2410, T.I.A.S. 6347, 610 U.N.T.S. 205. Article XII requires that "all stations . . . on the moon and other celestial bodies shall be open to representatives of other States Parties to the Treaty on a basis of reciprocity." Id. at 2418. Since the Treaty is widely accepted, this could prove a major barrier to capacity controls on lunar service.

196. The Code of Conduct could virtually eliminate international competition with its national preferences. See Kanuk, The UNCTAD Code of Conduct for Liner Conferences: Trade Milestone or Millstone-Time Will Soon Tell, 6 Nw. J. INT'L L. & BUS. 357, 358 (1984).

197. P. HAANAPPEL, supra note 191, at 50-56.

198. Id. at 57-60.

199. For a discussion of the structure and operation of OPEC, see Comment, OPEC as a Legal Entity, 3 FORDHAM INT'L L. FORUM 91 (1979-80).

200. In order to implement airline capacity controls, the Civil Aeronautics Board waived applicability of the antitrust laws. P. HAANAPPEL, supra note 191, at 83. The launch industry would require similar intervention.

201. McGee, Ocean Freight Rate Conferences and the American Merchant Marine, 27 U. CHI. L. REV. 191, 197 (1960).

202. Id. at 199, 201.

203. If the cartel experiences enough success to maintain monopoly profits long enough for other parties to realize their value, there will be new entrants into the market. These new competitors will eventually cause the collapse of the cartel, and there will be even more competitors, with even more excess capacity, than before the cartel was formed. Id. at 202.

204. 19 U.S.C. § 1303 (1988).

205. Id. § 1303(a)(1) (1988).

206. Id.

207. Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the General Agreement on Tariffs and Trade, opened for signature June 30, 1979, GATT Basic Instruments and Selected Documents 58-83 (26th Supp. 1980) [hereinafter Subsidies Code].

208. 19 U.S.C. § 1671 (1988).

209. Id. § 1303(a)(1).

210. Id. § 1671(a)(2).

211. Id. § 1671(a)(1)."Subsidy" is defined by 19 U.S.C. § 1677(5), and is intended to have the same meaning as "bounty or grant."

212. Id. § 1677(5)(A)(i). These subsidies are listed in an annex to the Subsidies Code, supra note 207, Annex(a), at 80, but can be difficult to classify in practice. Sykes, Countervailing Duty Law: An Economic Perspective, 89 COLUM. L. REV 199, 203 (1989).

213. 19 U.S.C. § 1677(5)(A)(ii) (1988). Specific benefits are those provided to the producer alone rather than to the general public. Sykes, supra note 212, at 204.

214. Ipsco, Inc. v. United States, 899 F.2d 1192, 1195-96 (Fed. Cir. 1990). The court found that the ITC is often inconsistent in figuring the amounts of subsidies. Id. at 1197.

215. See Sykes, supra note 212, at 205.

216. 19 U.S.C. § 1671a(a) (1988).

217. Id. § 1671a(b).

218. Id. § 1673.

219. Id. § 1673(1).

220. Id. § 1673a(a).

221. Id. § 1673a(b).

222. Id. § 1673(2).

223. Id. § 1677(7)(B), (C). One factor that could be important for the commercial launch industry is the potential injury to the industry's ability to develop derivative technology, id. § 1677(7)(C)(iii)(IV), since many of the country's future space plans depend on development of technology by existing NASA contractors.

224. Id. § 1673.

225. General Agreement on Tariffs and Trade, Oct. 30, 1947, art. VI, 61 Stat. 5, 11, 58, T.I.A.S. No. 1700, 55 U.N.T.S. 187, 258.

226. Zerby, Ellsworth & Schmitt, Dumping of Non-Factor Services: Some Implications of Recent Experiences with Controlled-Economy Shipping, 4 NW. J. INT'L L. & BUS. 37, 38-39 (1982).

227. 15 U.S.C. § 72 (1988).

228. Id. The 1916 Act also allows the President to prohibit the import of the offending item. 15 U.S.C. § 75 (1988). For a discussion of the Antidumping Act of 1916, see Sidak, A Framework for Administering the 1916 Antidumping Act: Lessons from Antitrust Economics, 18 STAN. J. INT'L L. 337 (1982).

229. 15 U.S.C. § 72 (1988).

230. Currently countervailing duties may be imposed only on "any article or merchandise." 19 U.S.C. § 1303(a)(1) (1988). See supra note 205 and accompanying text.

231. 19 U.S.C. § 1673 (1988). See supra note 224 and accompanying text.

232. The European Community's GATT services proposal addresses the issue of dumping of services. Hindley, Services, in COMPLETING THE URUGUAY ROUND: A RESULTS-ORIENTED APPROACH TO THE GATT TRADE NEGOTIATIONS 130, 136 n.3. (J. Schott ed. 1990). One sector of services in which dumping has already been examined is that of shipping. Zerby, Ellsworth & Schmitt, supra note 226, at 51-56. More recently, there have been allegations of dumping by foreign providers on the U.S. market. U.S. Supports Cross Retaliation Concept in GATT Services Talks, USTR Official Says, 7 Int'l Trade Rep. (BNA) 1111, 1111 (July 18, 1990) [hereinafter U.S. Supports Cross Retaliation].

233. U.S. Supports Cross Retaliation, supra note 232, at 1111-12.

234. Id. However, Deputy Assistant Secretary of Commerce for Services Linda Powers told the House Task Force on the International Competitiveness of U.S. Financial Institutions that although the United States is concerned with services dumping and is considering modifying domestic antidumping law, it must do so cautiously since the U.S. could stand to lose a great deal from foreign retaliatory measures against U.S. services. Id.

235. Adding the word "services" to the definitions in 19 U.S.C. §§ 1303(a)(1), 1671(a)(1), & 1673, and 15 U.S.C. § 72, and corresponding modifications to include "service providers" would not be enough. Because services can be "exported" by the service provider going to the customer or by the customer coming to the service provider, the definition of "export" would be crucial.

236. The effects doctrine was first enunciated in the field of antitrust law by Judge Learned Hand in United States v. Aluminum Co. of Am., 148 F.2d 416 (1945). The Supreme Court has since indicated its approval of the effects doctrine. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 704 (1962) ("[a] conspiracy to monopolize or restrain the domestic or foreign commerce of the United States is not outside the reach of the Sherman Act just because part of the conduct complained of occurs in foreign countries" (citations omitted)). It has since been codified as Section 7 of the Sherman Act by the Foreign Trade Antitrust Improvements Act of 1982, Pub. L. 97-290, Title IV § 402, 96 Stat. 1246 (codified as amended at 15 U.S.C. § 6a (1988)). Standards governing when to apply the effects doctrine were set out in Timberlane Lumber Co. v. Bank of Am., 749 F.2d 1378 (9th Cir. 1984), cert. denied, 472 U.S. 1032 (1985).

237. The European Court of Justice declined to rely on the effects doctrine in striking down North American and Scandanavian pulpwood cartels under European Community competition laws. A. Ahlström Osakeyhtiö v. Comm'n, Case 89/85, 1988 Common Mkt. Rep. (CCH) ¶ 14,491 at 18,612 (1988). This was despite strong argument by the Advocate General that the effects doctrine be adopted. Id. at 18,623. At the national level, the United Kingdom has gone so far as to prohibit its courts from assisting in the adjudication of any case or the enforcement of any judgment that infringes on its sovereignty. Protection of Trading Interests Act, 1982, ch. 11, §§ 4-6, reprinted in 21 INT'L LEGAL MAT. 834 (1982). For an exchange of diplomatic notes between the United States and the United Kingdom on the subject of antitrust jurisdiction, see 21 INT'L LEGAL MAT. 840-50 (1980). For a discussion of other countries' blocking laws in response to the effects doctrine, see Cira, The Challenge of Foreign Laws to Block American Antitrust Actions, 18 STAN. J. INT'L L. 247, 248-60 (1982).

238. The development of antitrust and antidumping law shares some parallels. Zerby, Ellsworth & Schmitt, supra note 226, at 42-43.

239. 15 U.S.C. § 6a (1988).

240. There is very little case law on this subject. See McGlinchy v. Shell Chemical Co., 845 F.2d 802, 814-15 (9th Cir. 1988) (sales agents who provided services for chemical company in Southeast Asia were not "exporters" for purposes of § 6a(1)(B)). But see In re Insurance Antitrust Litigation, 723 F. Supp. 464, 486 (N.D. Cal. 1989) (applying effects doctrine to find that foreign reinsurers were importers of reinsurance services for purposes of § 6a(1)(A)), rev'd on other grounds, 938 F.2d 919 (9th Cir. 1991). No cases have addressed whether U.S. service providers that provide services within the United States are exporters under section 6a(1)(B).

241. Section 1605(a)(2) of the Foreign Sovereign Immunities Act states that no foreign state will be immune from U.S. jurisdiction in an action based on commercial activity. 28 U.S.C. § 1605(a)(2). Commercial activity is defined by type, rather than by purpose. Id. § 1603(d). Activities typically carried out for profit are usually considered commercial if performed by a government. Comment, Two Faces of the Trader: Guidelines for Distinguishing Between Governmental and Commercial Acts Under the Foreign Sovereign Immunities Act of 1976, 23 TEX. INT'L L.J. 465, 469-70 (1988).

There is strong evidence for a commercial exception to the act of state doctrine. A plurality of the Supreme Court has suggested that the act of state doctrine should not be extended to commercial activities in light of the current restrictive approach to sovereign immunity. Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 695 (1976). See also Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1048 n.25 (9th Cir. 1983); Hunt v. Mobil Oil Corp., 550 F.2d 68, 73 (2d Cir. 1977); Leigh & Sabbatino, Silver Anniversary and the Restatement: No Cause for Celebration, 24 INT'L L. 1, 12-14 (1990).

242. Launches by a governmental launcher for its own government would not always be commercial activity, since the profit motive will not usually be present. This Comment does not take the position that governments should be regulated when providing launch services for themselves.

243. Hindley, supra note 232, at 130-131.

244. Zerby, Ellsworth & Schmitt, supra note 226, at 38 n.8.

245. Comment, supra note 6, at 146. In this regard launch services are different from most services, for which the only possible trade regulation is through the use of non-tariff barriers. Hindley, supra note 232, at 133.

246. Sykes, supra note 212, at 220.

247. See id. In these cases, which are more common than perfect elasticity, the benefits to the economy as a whole, and to domestic consumers, are very hard to quantify. Id. The ability of a firm receiving a subsidy to shift the effect of a countervailing duty will depend on the market power of that seller and on the monopsony power of the imposing country's consumers. See id. at 223.

248. See id. at 236.

249. See supra note 234.

250. 19 U.S.C. § 2411 (1988).

251. Id. § 1337.

252. Id. § 2411(c)(1)(B).

253. Id. § 2411(a)(1)(B)(ii).

254. Id. § 2411(a)(1)(A).

255. Id. § 2411(a)(1)(B)(ii).

256. Id. § 2411(d)(3)(B).

257. Id. § 2411(c)(1)(B).

258. Section 301(b) allows the USTR to withdraw trade concessions, impose new restrictions, and obtain new agreements from offending countries. Id. § 2411(c)(1)(A)-(C).

259. The USTR must determine whether to act on a private petition within 45 days. Id. § 2412(a)(2). If she decides not to act, she must "inform the petitioner of the reasons therefor." Id. § 2412(a)(3).

260. Id. § 2412(b).

261. Raclin, supra note 79, at 50-52.

262. Determination Under Section 301 of the Trade Act of 1974 (memorandum for the United States Trade Representative), 50 Fed. Reg. 29631-32 (1985).

263. The President stated that many of Arianespace's alleged violations were also practiced by the United States. Since up to this time only governments had been involved in providing launch services, the President reasoned that the trade laws should not be used to judge the validity of government programs to encourage the use of space. He went on to say that there was little difference between the American and European markets for launch services. For the most part, both were captive markets of the government launcher, since the overall majority of demand for launch services was governmental. The only difference was that in the United States there was a growing private buyers' market. Furthermore, given the lack of a private sellers' market, there was no harm in governments offering discounts to establish themselves in the commercial market, since this was an economically acceptable practice. Id.

264. U.S., Japan Reach Tentative Pact to Open Japan's Public Sector Satellite Markets, 7 Int'l Trade Rep. (BNA) 460 (Apr. 4, 1990).

265. The petition of the National Space Society was lodged in protest of Chinese violations of the 1989 space launch agreement between the United States and China. President Authorizes U.S. Participation, supra note 110, at 1326-27. See also supra note 94 and accompanying text.

266. 19 U.S.C. § 1337 (1988).

267. Id. § 1337(b)(1).

268. Id. § 1337(b)(3).

269. Id. § 1337(d).

270. Id. § 1337(a)(1).

271. Id. § 1337(a)(1)(A).

272. Although the federal government requires domestic launchers to obtain a launch license for domestic launches licensed under the Commercial Space Launch Act, 49 U.S.C. § 2605 (1988), export licenses are no longer required. Id. § 2620 (1988). The Department of Transportation is to issue terms for review of launch license applications, 14 C.F.R. §§ 400-415 (1990), but is free to allow national security concerns to be used as a justification for a denial of a launch license. Id. § 411.7(a) (1990).

273. See supra note 124 and accompanying text.

274. Pub. L. No. 101-162, § 610, 103 Stat. 988, 1038 (1989) (prohibiting the use of Commerce Department funds to approve export licenses for launch in China or the Soviet Union). President Bush was able to avoid the scope of this statute in approving the launch AsiaSat on the Long March rocket, see supra note 91 and accompanying text, through the use of a substantial national interest exception. Kuckelman, Regulation of Exports for Commercial Space Launches Outside the United States, 38 FED. B. NEWS & J. 135, 138 (1991).

275. 22 U.S.C. §§ 2751-2796 (1988). For an in depth discussion of the AECA as it applies to satellite exporters, see Kuckelman, supra note 274.

276. 22 C.F.R. §§ 120-130 (1991).

277. 22 U.S.C. § 2778 (1988).

278. 22 C.F.R. §§ 120.3, 121.1(b) (1991). Non-military communications satellites are not included on the Munitions List, and therefore could fall under the coverage of the EAA and the COCOM Core list. Id.

279. 22 C.F.R. § 126.1 (1991). Included under the arms embargoes are most Communist countries, as well as those recently freed from Communist rule. Of possible launch providers, the prohibition includes the Soviet Union, but not China. Id. However, exceptions can be granted. Id. § 126.3.

280. Id. §§ 123.1 (unclassified defense articles), 125.2 (unclassified technical data), 125.3 (classified technical data and defense articles). Both defense articles and technical data are relevant to the export of satellites, since exporters will need to export the satellite and provide satellite mating and preparation services at the site of the launch. Kuckelman, supra note 274, at 136, 137. Proposals to sell significant military equipment on the Munitions List in excess of $14 million (which includes most satellites) for use by the military of a non-COCOM government (except Iceland) also requires prior notification of the Office of Munitions Control. 22 C.F.R. § 126.8 (1991).

281. Kuckelman, supra note 274, at 136. Although review is based on a list of objective factors, it is done on a case by case basis and can easily be made subjective by the world peace and foreign policy exceptions. Id. at 137. Recently, particularly with regard to the launch of the AsiaSat in China, see supra note 91 and accompanying text, it appears that the Administration has added the consideration of the effect of the license on trade. Kuckelman, supra note 274, at 137-38. Such a calculus involves both the relation of the agreement to existing trade agreements, and the effect on the specific parties seeking to export. Id.

282. For a discussion of COCOM, see infra notes 295-99 and accompanying text.

283. 50 U.S.C. §§ 2401-2406 (1988).

284. Id. § 2403(a).

285. Id. §§ 2403(b), 2404(c), 2405(l).

286. Id. § 2404.

287. Id. § 2405.

288. Id. § 2406.

289. Id. §§ 2403(c), 2404(f), 2405(h).

290. Id. § 2406.

291. Japan and Europe are included in the relatively liberal Group V, as is China (with restrictions), but the Soviet Union is included in the more strict Group Y. 15 C.F.R. § 770, Supp. 1 (1991).

292. Id. §§ 799.1(a), 799.1, Supp. 1 (1991).

293. Id. § 799.1(b).

294. Id. §§ 799.1(f), 799.1, Supp. 1 (1991).

295. COCOM is a voluntary organization that has no formal treaty or organization. Decisions on export controls are made unanimously on issues such as inclusion of items on its control list and granting of individual exceptions. COCOM also tries to coordinate enforcement efforts. COCOM includes the United States, Belgium, Canada, Denmark, France, Germany, Greece, Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, Turkey, and the United Kingdom. In the U.S., the Department of Commerce is responsible for enforcing COCOM regulations. Comment, Curbing Illegal Transfers of Foreign-Developed Critical High Technology from CoCom Nations to the Soviet Union: An Analysis of the Toshiba-Kongsberg Incident, 12 B.C. INT'L & COMP. L. REV. 181, 201-02 (1989). The rules and procedures of COCOM are confidential, so specific information about COCOM is very scarce. Hunt, COCOM and Other International Cooperation in Export Control, in COPING WITH U.S. EXPORT CONTROLS 1991 97, 104-05 (Practising Law Institute 1991). There is no official publication of COCOM core lists, which serve only as guidelines for the regulations of the member states. Id. at 106.

296. Hunt, supra note 295, at 106.

297. This constitutes a group of exceptions to the general COCOM guidelines which results in a significantly more liberal export regime with regard to China. Id. at 109.

298. 15 C.F.R. § 771.25 (1991).

299. It is possible this could change soon. A recent report prepared by an influential panel recommends that existing controls on trade with COCOM nations be significantly reduced. National Academy of Science, National Academy of Engineering, & Institute of Medicine, Findings and Recommendations from Executive Summary of Report, "Finding Common Ground: U.S. Export Controls in a Changed Global Environment," reprinted in 8 Int'l Trade Rep. (BNA) 218, 221 (Feb. 6, 1991).

300. Pine, U.S. Offers to Ease High-Tech Trade, L.A. Times, May 3, 1990, at A1.

301. Id. at A9.

302. U.S., COCOM Allies Agree on New "Core List" of Controlled Exports, Industry Disappointed, 8 Int'l Trade Rep. (BNA) 800 (May 29, 1991) [hereinafter U.S., COCOM Allies Agree].

303. White House Fact Sheet on Core List of Controlled Exports by Industry Sector, Agreed upon by Coordinating Committee for Multilateral Export Controls (COCOM) in Paris May 24, 1991, reprinted in 8 Int'l Trade Rep. (BNA) 839 (May 29, 1991).

304. Fact Sheet on U.S. Core List Proposal to COCOM, reprinted in 7 Int'l Trade Rep. (BNA) 1526, 1527 (Oct. 3, 1990).

305. Lenorovitz, Cocom Eases Restrictions on Export of High-Tech Equipment to Eastern Bloc, AVIATION WK. & SPACE TECH., June 10, 1991, at 73.

306. Id.

307. U.S., COCOM Allies Agree, supra note 302, at 800-801.

308. However, predatory use of export control regulations would violate the spirit of Section 9 of the Commercial Space Launch Act Amendments of 1988. See infra note 315.

309. See supra note 274.

310. See supra note 124 and accompanying text.

311. Hughes has strongly advocated such an open access policy. Asker, U.S. Approval of Satellite Launches by China Not the End of Sanctions, AVIATION WK. & SPACE TECH., Jan. 1, 1990, at 40. This is particularly important for countries far from the Equator, such as the Soviet Union, which is seeking to use Australia's Cape York facility. See supra note 110.

312. Hughes' export license to allow the recent launch of its satellites in China was conditioned on just this kind of arrangement. One dozen Hughes and military guards stood watch over the satellites during their stay in China to assure that U.S. regulations on technology transfer were not violated. Proctor, supra note 90, at 28. Since satellites are practically unrecoverable once in orbit, this type of monitoring would be sufficient to protect the technology and prevent its adverse use, so long as manipulation of controlled technology could not be achieved from a ground station.

313. Kuckelman, supra note 274, at 138.

314. Id. at 137-38.

315. Section 9 of the 1988 Amendments states: