[Federal Register Volume 59, Number 47 (Thursday, March 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5498]
[[Page Unknown]]
[Federal Register: March 10, 1994]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Guidelines for U.S. Implementation of the Agreement Between the
U.S. and Russian Federation Government Regarding International Trade in
Commercial Space Launch Services
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of guidelines for U.S. implementation of the agreement
between the Government of the United States of America and the
Government of the Russian Federation regarding international trade in
commercial space launch services.
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DATES: The Agreement entered into force on September 2, 1993. These
guidelines on monitoring and enforcement are effective upon
publication.
FOR FURTHER INFORMATION CONTACT: Scott Monier, (202) 395-3320, Director
for European Industry and Technology, Office of the U.S. Trade
Representative, 600 17th Street, NW., Washington, DC 20506. (Copies of
the Agreement referenced herein can be obtained from the official
designated above.)
SUMMARY: On September 2, 1993, the United States and the Russian
Federation entered into the Agreement Between the Government of the
United States of America and the Government of the Russian Federation
Regarding International Trade in Commercial Space Launch Services
(Agreement). The Agreement allows the Russian Federation (Russia) to
enter the international commercial space launch market during the
country's transition to an economy based on market principles in a
manner intended to prevent disruption of normal competition. In order
to assist in the successful operation of the Agreement, the U.S.
Government has established certain guidelines it intends to follow in
implementing the Agreement. This notice sets out those guidelines.
SUPPLEMENTARY INFORMATION
Background
At the June 1992 Summit between former President Bush and Russian
President Yeltsin, the United States announced that it was granting a
one-time exception to its policy of prohibiting the export of U.S.-made
satellites or satellites incorporating U.S. technology (essentially all
Western satellites) to Russia for launch on Russian space launch
vehicles. This one-time exception allowed the International Maritime
Satellite Organization (INMARSAT) to select a Russian launcher to
launch an INMARSAT 3 satellite. At the same time, the United States
stated that, while no further exceptions would be granted, it was
willing to undertake negotiations on Russian entry into the
international commercial space launch services market. The negotiations
culminated in an agreement which would provide Russia, during its
transitional phase from a non-market to market economy, access to the
international commercial launch services market yet ensure against
severe market distortion or disruption to the market. The Agreement was
signed by Vice President Gore and Russian Prime Minister Chernomyrdin
and entered into force on September 2, 1993.
The Agreement
Definition of Terms
The Agreement defines certain terms, as follows:
Contract means (i) to agree or commit to the provision of
commercial space launch services such that a launch is effectively
removed from competition in the international market, or (ii) any such
agreement or commitment.
International customer means any person; or any kind of
corporation, company, association, venture, partnership, or other
entity, whether or not organized for pecuniary gain, or privately or
governmentally owned or controlled; or any governmental body, excluding
the Government of the United States of America and the Government of
the Russian Federation; or any intergovernmental organization or quasi-
governmental consortium, including but not limited to INTELSAT,
INMARSAT and their respective legal successors, that is the ultimate
owner or operator of a spacecraft or satellite or that will deliver the
spacecraft or satellite to orbit for use by such ultimate owner or
operator.
Principal payload means a telecommunications satellite or, in the
absence of a telecommunications satellite, any other spacecraft or
combination of spacecraft.
Russian space launch service provider means any entity, agent or
instrumentality acting on its behalf, permitted by the Government of
the Russian Federation to provide commercial space launch services or
the space launch vehicles for such services.
Agreement Terms
The Agreement establishes basic rules for avoiding distortion which
results from government involvement in the commercial space launch
market by prohibiting such practices as certain subsidies, marketing
inducements, and corrupt business practices. The terms of the Agreement
also include the following specific provisions:
Quantity Provisions
The Agreement permits Russian space launch services providers to
contract with international customers for the launch of up to eight (8)
principal payloads, in addition to the INMARSAT-3 satellite, to
geosynchronous earth orbit (GEO) or geosynchronous transfer orbit
(GTO), for the duration of the agreement (through December 31, 2000).
Not more than two (2) such launches may be conducted in any twelve-
month period.
Up to four (4) of these launches may be of two principal payloads,
and each of these may be counted against the quantity limitation as
single launches if the parties mutually agree that the international
space launch market so warrants.
The Agreement also allows Russian space launch service providers to
contract for up to three (3) launches to low earth orbit (LEO) for the
Iridium system. Proposals by Russian space launch service providers for
commercial suborbital launches LEO and launches to orbits other than
GEO and GTO will be considered on a case by case basis, where there are
competing comparable commercial space launch services.
Pricing Provisions
The Agreement provides that prices, terms, and conditions offered
by Russian space launch service providers shall be comparable to those
offered for comparable space launch services by commercial launch
service providers from market economy countries. For GEO and GTO
launches, the Agreement establishes a specific pricing mechanism. Bids
or offers for launches to GEO or GTO more than 7.5% below the lowest
market economy bid trigger special consultations in which Russia must
demonstrate that its offer conforms to the principles of the Agreement.
Bids or offers for Russian launch services to orbits other than GEO/GTO
are not subject to a specific pricing mechanism; however, prices,
terms, and conditions must be comparable to those offered by providers
from market economy countries. Accordingly, the comparable pricing
provision of the Agreement applies to all launches by Russian space
launch service providers, including those to LEO.
The pricing provisions of the Agreement apply to bids or offers
made as part of a sole-source procurement as well as to completed
contracts.
Consultations
The Agreement requires the United States and Russia to hold annual
consultations to ``* * * review and examine implementation of the
Agreement and market developments in commercial space launch
services.'' The Agreement also allows the United States or Russia to
request special consultations ``on an urgent basis'' prior to the
conclusion of a contract, if possible, if either Party has reason to
believe that a contract or pending contract is inconsistent with the
terms of the Agreement.
Applicability Guidelines
Russian Launch Vehicles
All types or classes of launch vehicles that may be used by a
Russian space launch service provider to provide commercial space
launch services are subject to the Agreement.
Russian Space Launch Service Providers
Transactions involving launch service providers, regardless of
nationality, permitted by the Russian Federation to provide commercial
space launch services on Russian launch vehicles are subject to the
terms of the Agreement.
Leasing on-Orbit
Leasing a satellite on orbit or satellite transponders does not
remove a transaction from the terms of the Agreement. As a general
rule, the Agreement applies to a contract calling for the leasing of a
satellite on-orbit as to one requiring the launch of a satellite
purchased by the customer. The definition of ``international customer''
as defined in the Agreement makes no distinction based upon the
financing arrangement selected for the satellite. There will be no
special consideration given to leased satellites launched solely for
use by an international customer.
Nationality of Satellite Manufacturer
The terms of the Agreement apply to all satellites, regardless of
the manufacturer's nationality. The Agreement is intended to be neutral
in its effects on the satellite market.
Contracts Signed Prior to the Agreement
Contracts signed prior to the Agreement for the launch of a
satellite subject to United States export controls will be considered
under the terms of the Agreement.
Contracts signed prior to the Agreement for the launch of a
Russian-built satellite for purchase or lease by an international
customer are excluded from the terms of the Agreement.
Options Agreements/Reservations
An option agreement or reservation for Russian commercial space
launch services, entered into on or before September 2, 1993, is
subject to the terms and provisions of the Agreement.
Monitoring and Enforcement
A. Designation of Responsibility
The Trade Policy Staff Committee Subcommittee on Russian Space
Launch Services (Subcommittee), will be responsible for overall
implementation of the Agreement.
B. Subcommittee Organization
For purposes of carrying out its responsibilities with respect to
overall implementation of the Agreement, the Subcommittee will be
chaired by the Office of the United States Trade Representative (USTR)
and will be composed of the Departments of Transportation, State,
Commerce, Justice, Defense and Treasury, the Office of Management and
Budget (OMB), the National Aeronautics and Space Administration (NASA),
the Office of Science and Technology Policy (OSTP), the Joint Chiefs of
Staff, and such other departments and agencies as may be invited by the
Chair to participate. A Working Group on Information (WGI) will be
established to assemble such information as is necessary to enable the
Subcommittee to carry out its responsibilities. The WGI will be chaired
by the Department of Transportation (DOT) and will include the
Departments of Commerce, State, Defense, and such other departments or
agencies as designated by the Chair of the Subcommittee.
C. Monitoring and Data Collection
The Subcommittee will monitor Russian compliance with the
Agreement. To this end, the Subcommittee will review market and other
information relevant to participation in the commercial launch services
market by Russian space launch service providers and compliance by
those providers with the terms of the Agreement. This information will
be assembled, together with a preliminary assessment, and presented to
the Subcommittee by the WGI. In monitoring Russian compliance with the
Agreement, particular attention will be given to information on the
number of contracts with international customers and the distribution
of contracts by Russian space launch service providers within any
twelve-month period; prices, terms and conditions offered or provided
by Russian space launch service providers; unfair business practices;
grants and subsidies to commercial space launch services suppliers;
inducements to international customers; insurance or reflight
guarantees; and government-supported financing for commercial space
launch vehicles or services except in accord with the Organization for
Economic Cooperation and Development's (OECD) ``Arrangement on
Guidelines for Officially-Supported Export Credits.''
The Subcommittee will review and determine which information is to
be provided to Russia to comply with U.S. obligations under the
Agreement. This information will be assembled, together with a
preliminary assessment, and presented to the Subcommittee by the WGI in
a timely fashion so that it could then be made available to Russia in
accordance with the terms of the Agreement.
Particular attention will be given to U.S. obligations under the
Agreement with respect to the provision of publicly releasable
information to Russia on prices, terms, and conditions offered in the
international market for commercial launch services, including
insurance arrangements relating to such services.
The WGI will periodically produce information and preliminary
assessments of conditions in the commercial launch services market,
including prices, terms and conditions, commitments, and market
forecasts for the Subcommittee as needed to implement effectively the
Agreement and at least 30 days prior to annual consultations.
The WGI will also provide to the Subcommittee such additional
information and preliminary assessments on compliance by Russian space
launch service providers with the provisions of the Agreement as
needed, and at least 30 days prior to annual consultations, or as
needed prior to any additional or special consultations.
D. Consultations
The Subcommittee will hold annual consultations with the Russian
Federation as outlined in the Agreement. The Subcommittee will exchange
information with Russian authorities in advance of such consultations.
The Subcommittee will meet in advance of the annual consultations.
The Subcommittee will provide all information, including prices, terms
and conditions offered for commercial space launch services, necessary
to monitor the Agreement and carry out regular and special
consultation. Such information shall be provided to U.S. and/or Russian
government authorities promptly, and in any case, no later than 30 days
after a request, except that such information need not be provided
prior to bids for commercial space launch services.
Following consultations, the Subcommittee will also report on the
results of the consultations and recommend any follow-up actions to the
TPSC or other appropriate government agencies.
The Subcommittee will consider whether consultations with other
international parties could be beneficial, by aiding in the monitoring
of the Agreement. If the Subcommittee determines that consultations
could be beneficial, it will recommend to the TPSC and to the USTR that
such consultations be initiated.
The Subcommittee and the WGI may, in carrying out the functions and
procedures set forth herein, consult with U.S. commercial launch
services providers, launch vehicle and satellite manufacturers, and, as
appropriate, interested Congressional committees, the user community,
and other interested parties, including the relevant private sector
advisory committees. Such contacts will be made in conjunction with the
information collection and assessments referred to herein and U.S.
preparation for, and follow-up on the results of, meetings with Russia
held under the Agreement. The Subcommittee will also, as appropriate,
inform such interested parties of significant requests or notifications
made by Russia under the Agreement, or significant developments under
the Agreement.
E. Information Sharing
In the course of consulting with interested parties, in particular
prior to annual consultations under the Agreement, the U.S. Government
may provide such information provided by Russia as is allowed and
appropriate under the Agreement, subject to business confidentiality.
F. Collection of Information
DOT, as Chair of the WGI, will have primary responsibility for
soliciting and receiving relevant information, and will maintain data
to be collected and reviewed by the WGI for purposes of this Agreement.
Members of the U.S. industry, and other interested members of the
public, are invited to submit written comments on issues related to the
Agreement and its operation. Comments must be provided in twenty copies
to the DOT Office of Commercial Space Transportation, Attention:
Working Group on Information for Russian Space Launch Services, 400 7th
Street, SW., room 5408, Washington, DC 20590-0001.
Submissions from the public will be placed in a file open to public
inspection at the above address pursuant to 15 CFR Sec. 2003.5, except
confidential business information exempt from public inspection in
accordance with 15 CFR 2003.6. Confidential business information
submitted in accordance with 15 CFR 2003.6 must be clearly marked
``Business Confidential'' at the top of the cover page or letter and
each succeeding page, and must be accompanied by a nonconfidential
summary of the confidential information.
G. Enforcement
If the Subcommittee is of the view that the provisions of the
Agreement have been violated as a result of information obtained in any
annual or special consultation and review required under Article VII of
the Agreement or on the basis of information presented to it by the
WGI, the Subcommittee will notify the TPSC and recommend consultations
with Russia. If consultations proceed and satisfactory resolution is
not achieved with Russia, or if consultations are deemed to be
inappropriate in the circumstances, based on recommendations of the
Subcommittee, the Section 301 Committee may be requested to review the
case.
The USTR will, from time to time, advise the Secretary of State and
the Secretary of Commerce of the status of the implementation of the
agreement in order that this information may be available to the
Secretaries with respect to the State Department export license
responsibilities under the Arms Export Control Act and the implementing
regulations, the International Traffic in Arms Regulations, 22 CFR
parts 120-130 and the Commerce Department export license
responsibilities under the Export Administration Act.
Frederick L. Montgomery,
Chairman, Trade Policy Staff Committee.
[FR Doc. 94-5498 Filed 3-9-94; 8:45 am]
BILLING CODE 3190-01-M
