[Federal Register Volume 60, Number 81 (Thursday, April 27, 1995)]
[Sunshine Act Meetings]
[Page 20801]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10495]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
International Trade in Commercial Space Launch Services;
Guidelines for Implementation of the Memorandum of Agreement With the
People's Republic of China
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of guidelines for U.S. implementation of the renewed
Memorandum of Agreement Between the United States of America and the
Government of the People's Republic of China Regarding International
Trade in Commercial Launch Services (the Agreement).
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SUMMARY: On March 13, 1995, the United States and the People's Republic
of China (PRC) Signed a Memorandum of Agreement regarding international
trade in commercial launch services for the period from January 1, 1995
to December 31, 2001. The Agreement renews the first U.S.-PRC
Memorandum of Agreement which was signed on January 26, 1989 and
expired on December 31, 1994. 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 these guidelines.
DATES: The Agreement is effective as of January 1, 1995. These
guidelines on implementation are effective on April 27, 1995.
FOR FURTHER INFORMATION CONTACT:
Donald W. Eiss, Deputy Assistant U.S. Trade Representative for
Industry, (202) 395-5656; Michael A. Spangler, Director of Commercial
Space Policy, (202) 395-9602; or Vanessa P. Sciarra, Assistant General
Counsel, (202) 395-7305; of the Office of the United States Trade
Representative, 600 17th Street NW., Washington, DC 20506.
SUPPLEMENTARY INFORMATION: The current Memorandum of Agreement between
the U.S. and the PRC regarding international trade in commercial launch
services governs relevant trade in this type of service for the period
January 1, 1995 to December 31, 2001. The Agreement renews the first
U.S.-PRC Memorandum of Agreement which was signed on January 26, 1989
and expired on December 31, 1994. 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.
Copies of the Agreement are available for public inspection in the
USTR Reading Room: Room 101, Office of the United States Trade
Representative, 600 17th Street, NW., Washington, DC 20506. An
appointment to review the Agreement may be made by calling Brenda Webb
(202) 395-6186. The USTR Reading Room is open to the public from 10
a.m. to 12 noon and 1 p.m. to 4 p.m., Monday through Friday.
I. Designation of Responsibility
Subject to the direction of the Trade Policy Staff Committee
(TPSC), the TPSC Subcommittee on Commercial Launch Services (the
Subcommittee) will be responsible for overall implementation of the
Agreement.
II. Subcommittee Organization
For purposes of carrying out its responsibilities with respect to
overall implementation of the Agreement, the Subcommittee will be
chaired by USTR and will be composed of TPSC member agencies as may be
invited by the Chairman to participate. A Working Group on Information
(the Working Group) has been established to assemble such information
as may be necessary to enable the Subcommittee to carry out its
responsibilities. The Working Group is chaired by the Department of
Transportation and includes the Department of Commerce, the Department
of State, and such other departments or agencies as are designated by
the Chairman of the Subcommittee.
III. Subcommittee Functions and Procedures
1. Data Collection and Monitoring of the Agreement
Subcommittee Functions. The Subcommittee performs two key functions
with respect to the Agreement: (1) Ongoing assessment of the operation
of the agreement relative to U.S. goals and objectives for the
Agreement; and (2) monitoring PRC compliance with its specific
obligations under the Agreement.
With respect to the first function, those goals and objectives
include, inter alia: (i) Continuing the integration of PRC launch
services providers into the international market on a non-disruptive
basis; (ii) providing a stable international environment within which
U.S. space launch companies can compete on a fair basis as PRC launch
service providers continue their transition to absorbing the
disciplines of the marketplace (costs, prices, profits) fully; (iii)
ensuring that administration of the Agreement responds to changing
conditions so as to support the continued success in the international
commercial marketplace of all segments of the U.S. space industry,
i.e., space launch companies, satellite manufacturers, and systems
operators; and (iv) avoiding shortages of space launch capability that
would prevent the development of new uses of space.
As the market evaluates an ever-growing number of new and untested
proposals for the uses of commercial space, the U.S. Government fully
intends to permit the market, not this Agreement, to determine which of
these proposals are commercially successful. It is not the U.S.
Government's intention that the Agreement's disciplines should favor
the development of systems in one orbit as opposed to another (e.g.,
geostationary earth orbit (GEO) or low-earth orbit (LEO). The
Subcommittee will monitor the Agreement carefully so as to ensure that
the Agreement does not create an artificial advantage for business
proposals simply by virtue of [[Page 20797]] the orbit of the
satellites that will provide the service.
In addition, some commercial proposals are distinguishable by the
number of satellites that would be required to deliver the proposed
range and coverage of services. It is possible that some projects under
consideration could fundamentally change the dynamics of demand and
supply in the international space launch market. The Subcommittee will
closely monitor such developments with respect to the Agreement and, in
particular, their implications for the quantitative limitations of the
Agreement.
With respect to the Subcommittee's second function, particular
attention will be given to assessing information relevant to PRC
obligations under the Agreement concerning the number of launches
committed and carried out by the PRC to GEO; PRC participation in the
market for launches to LEO, including in the deployment of individual
communications satellite constellations; prices, terms and conditions
of all PRC launches; and use of government supports, inducements, or
unfair business practices.
Working Group Functions. The Working Group will develop information
and analyses necessary for the Subcommittee to discharge its
responsibilities in each of the two functions. In order to facilitate
the Subcommittee's overall monitoring of the Agreement, the Working
Group will produce information and analyses of conditions in the
international commercial launch services market, general pricing
trends, market performance and forecasts (aggregate, by orbit), launch
commitments, launch services supply and demand relationships, and
progress in the process of economic transition by PRC launch services
providers. In particular, the Working Group will generate information
on the number of commercial launches (including launch failures)
covered by the Agreement for 1995, 1996, 1997 and 1998. This
information will enable the Subcommittee to determine whether the
number of average annual launches is twenty or more in either the first
three or four years of the Agreement as provided for in Article IV(4)
of the Agreement. The Agreement provides for certain automatic
increases in the quantitative limit on launches to GEO if those
circumstances are found to exist.
This information will be provided to the Subcommittee as needed,
but in any event, the relevant information will be provided not later
than 30 days prior to the semiannual reviews of the development of the
market for commercial space launch services to GEO and 90 days prior to
annual consultations.
In order to ensure PRC compliance with the provisions of the
Agreement, the Working Group will collect information and conduct
necessary comparisons with respect to individual launch competitions in
which a PRC launch services provider is a participant, and when a
concern arises regarding compliance by the PRC launch services provider
with the provisions of the Agreement. These comparisons and related
analyses will be provided to the Subcommittee as required in individual
circumstances and 90 days prior to annual consultations.
Information Exchange. In addition, the Subcommittee will review and
determine which information will be provided to the PRC in compliance
with U.S. obligations under the Agreement. In making that
determination, particular attention will be given to U.S. obligations
under the Agreement with respect to the provision of publicly
releasable information to the PRC on prices, terms and conditions
prevailing in the international market for commercial launch services,
including insurance arrangements relating to such services; U.S. views
regarding prevailing international market conditions and likely future
developments; U.S. and other government supports or inducements; and
the number of commitments U.S. launch service providers have undertaken
for international customers.
2. Consultations
In preparing for the consultations discussed below, the
Subcommittee and the Working Group, as appropriate, will seek input
from the U.S. space industry, including the U.S. satellite industry.
Information will be sought sufficiently in advance to permit timely
input from the U.S. private sector. The soliciting of additional input
will be sought as needed in the course of such reviews.
Annual Consultations. The Subcommittee will meet at least 75 days
in advance of the annual consultations required by Article IV(1) of the
Agreement to begin preparations for such consultations. The
Subcommittee will seek to hold annual consultations beginning in April
1996 and during each subsequent April over the life of the Agreement
and to exchange information with the PRC at least thirty days in
advance of such consultations.
The annual consultations provide the opportunity for the two
parties to review the operation of the Agreement relative to its goals
and objectives as well as the performance of each party in implementing
the specific obligations of the Agreement over the preceding year (in
particular, the PRC's adherence to its commitments regarding its
participation in the market for launches to GEO and LEO). In addition,
the annual consultations will provide opportunities for the United
States to assess overall market trends as well as to identify the
emergence of a commercially viable project that fundamentally changes
demand in the overall launch services market. Prior to engaging in
annual consultations on such a development, the Subcommittee will
consider the implications of such a development for the disciplines
contained in this Agreement, taking into account the results of input
from the U.S. private sector on the matter.
One of the important new elements in the Agreement is Annex II,
which enumerates a list of comparability factors that will be used in
evaluating PRC compliance with its ``par pricing'' obligations on its
launches to GEO. The Annex contains a brief description of each factor
and an average range of values representing the impact that the factor
could have on the ultimate price to the customer when applied in a
procurement. During the annual consultations, these average values will
be reviewed and updated to ensure that they remain relevant to actual
conditions in the market.
Semiannual Consultations. The Agreement provides for a semiannual
review of the limitations on the total number of satellites that may be
launched to GEO by PRC providers of commercial launch services for
international customers and, if appropriate, adjustment to such
limitations.
In preparation for U.S. participation in that review, the
Subcommittee will assess whether: (i) International demand for GEO
launches is significantly greater than the estimated average of 12-15
commercial launches per year upon which the GEO quantitative
restriction is based over the life of the Agreement and (ii) the
development of a commercially viable project for satellite services has
fundamentally changed demand for launch services. The Working Group
will develop information on launch pricing, demand/supply projections
and launch availability and commitments, which it will provide to the
Subcommittee to permit these assessments. The Subcommittee will seek to
hold this review as provided for in Article IV(3) of the Agreement
during April and October of each year and to exchange information with
the PRC at least thirty [[Page 20798]] days after the Subcommittee's
assessment has been completed.
Special Consultations. The United States and the PRC have also
undertaken to consult within thirty (30) days of a request by either
party regarding any matter of particular concern relating to the
operation of the Agreement. The Agreement contemplates three particular
circumstances that would be the basis for such special consultations.
First, the United States may believe that the PRC has not upheld
its commitment to price ``on a par'' with Western launch service
providers in either the GEO or LEO markets. With respect to pricing in
competitions for launches to GEO, a request for special consultations
could be made in those instances in which the differential between the
PRC price and Western price is greater than 15 percent and after
preliminary analysis takes into account the pricing comparability
factors set out in Annex II of the agreement (see discussion of ``Price
Compliance'' below.)
Second, the United States may believe that there is an absence of
launch availability from a Western supplier for a satellite to GEO. The
purpose for this provision is to avoid a situation in which the
Agreement would deny to a satellite manufacturer/user the alternative
of a PRC launch vehicle and service for a launch to GEO even though no
Western alternative exists. Without the flexibility to respond to this
situation in a timely manner, the balance in the Agreement for all
segments of U.S. industry involved in space could be disrupted.
The third circumstance explicitly provided for in the Agreement
involves PRC participation in providing services for launches to LEO.
In the Agreement, the PRC has committed that its participation in the
LEO market will be consistent with the overall provisions of the
Agreement (inter alia, with respect to pricing, government inducements,
subsidies and nondiscrimination) and with significant U.S.
participation in the development of the LEO market, and the PRC has
agreed to take steps to ensure that such participation will be
proportionate and non-disruptive. The U.S. may request special
consultations if it believes that the PRC is participating, or may
participate, in the LEO market in a manner inconsistent with these
commitments.
Comprehensive Review. The Subcommittee will meet at least six
months in advance of the comprehensive review required by Article VII
of the Agreement to begin preparations for the review. Among its key
tasks, the Subcommittee will carefully monitor the implementation of
the Agreement to ensure that it contributes to, rather than detracts
from, the balanced development of the GEO and LEO market segments and
other segments of the market. In this regard, the Subcommittee will
consider adjustments to the quantitative and bunching restrictions in
Articles II(B)(ii) and II(B)(vi) to avoid distortive effects on various
market segments in light of the development of a commercially viable
project for satellite services that fundamentally changes demand for
launch services or the emergence of higher than anticipated demand for
GEO launches as provided for in Article IV(3)(a). The U.S. Government
will seek to conclude the comprehensive review with the PRC in October
1998 to coincide with the semi-annual review to be held at that time.
3. Lack of Western Launch Availability
Article IV(2) of the Agreement provides that the United States may
increase the quantitative limitation established under Article
II(b)(ii) or relax the bunching provision set out in Article II(b)(vi):
(i) If the United States is satisfied that there is an absence of
Western launch availability due to full manifests or launch failures
during the required launch period (generally within three months before
and after the preferred launch date), and (ii) if the PRC has reached
the limitation set out in Article II(b)(ii), or if the bunching
provisions established in Article II(b)(vi) would apply to prevent the
launch of a satellite.
In administering Article IV(2), the Subcommittee will follow the
procedures described in Sections A and B below.
(A) In support of a request that the United States increase the
quantitative limitation established under Article II(b)(ii) or relax
the bunching provision set out in Article II(b)(vi) due to the lack of
Western launch availability, a U.S. satellite manufacturer or U.S.
international customer (either of which constitutes a ``certifying
entity'') shall provide a properly executed written certification to
USTR. The written certification must contain the following elements:
(1) A statement by the certifying entity that, in the course of
negotiating with a prospective international customer for the sale of a
commercial satellite or with a launch provider for the launch of a
satellite, the certifying entity or an international customer of the
certifying entity has contacted all launch service providers with a
technically compatible vehicle, including all such domestic launch
service providers;
(2) A statement that the certifying entity or an international
customer of the certifying entity has contacted a launch vehicle
provider in the PRC regarding the availability of launch services by a
PRC provider and that space for the proposed satellite is available on
the PRC launch service provider's launch manifest;
(3) A statement that the PRC launch service provider is the only
launch service provider that is available during the required launch
period as defined in Article IV(2); and
(4) A statement that the certifying official is an official of the
certifying entity and is familiar with and responsible for the
negotiations regarding the proposed launch based upon information and
belief.
The above certification must be signed and dated by the certifying
official of the certifying entity. It must be accompanied by supporting
documents, including copies of the written requests made to each launch
service provider and a copy of the written response, if any was
received, from each provider regarding its unavailability to provide
the launch in the required launch period as defined in Article IV(2).
If no written response from a particular provider was received, the
certification should indicate the nature of the response.
USTR will exempt from public disclosure confidential business
information contained in any supporting documents in accordance with
the Freedom of Information Act, 5 U.S.C. Sec. 552, and any other
applicable law. Confidential business information submitted to USTR
must be clearly marked ``Business Confidential'' at the top of each
cover page or letter and each succeeding page containing such
information.
Upon receipt of a certification, USTR will review the certification
to ensure that it was executed properly and will review the supporting
documents to ensure that they provide satisfactory evidence of the
facts alleged in the certification.
(B) Within ten working days of the date of receipt of the
certification and supporting documents, USTR will indicate to the
certifying entity whether additional information will be required to
satisfy USTR that the facts as described in the certification are
correct. As soon as such information has been received which provides
such assurance, USTR will, within an additional ten working days,
determine that one of the conditions listed in Article IV(5) of the
Agreement has been [[Page 20799]] met and will notify the PRC that the
United States is exercising its unilateral authority under Article
IV(5) of the Agreement to raise the quota set out in Article II(b)(ii)
or relax the bunching provision described in Article II(b)(vi) in order
to permit the launch by a PRC launch service provider.
If, at the end of the ten-day period described above, USTR had not
indicated to the certifying entity that additional information is
required to satisfy USTR that the facts as described in the
certification are correct, then USTR will, within an additional ten
working days, determine that one of the conditions listed in Article
IV(5) of the Agreement has been met and will notify the PRC that the
United States is exercising its unilateral authority under Article
IV(5) of the Agreement to raise the quota set out in Article II(b)(ii)
or relax the bunching provision described in Article II(b)(vi) in order
to permit the launch by a PRC launch service provider.
4. Price Compliance
The Agreement allows the PRC to offer launch services at prices
``on a par with those prices, terms and conditions prevailing in the
international market for comparable commercial launch services'' as
stipulated in Article II(B)(iv).
The Agreement further describes the following mechanism that will
be utilized in applying the ``par-pricing'' requirement for launches to
GEO. Article II(B)(iv)(a) states that an unadjusted PRC price falling
within 15 percent of the lowest Western price will be assumed to be in
compliance with the Agreement. That assumption will only be reviewed if
clear evidence to the contrary is presented to the Subcommittee. In
those instances in which the price differential is greater than 15
percent, PRC compliance with the ``par pricing'' obligation will be
evaluated in light of the comparability factors and values contained in
Annex II of the Agreement. The U.S. intends to make a preliminary
evaluation prior to any decision to request special consultations.
Its is important to note that the 15 percent price differential is
only applicable to the difference between Western and PRC offer prices.
If a PRC offer price is more than 15 percent less than the lowest
Western price, the relevant comparability adjustments described in
Annex II will be made to the unadjusted PRC or Western offer prices, as
appropriate. Comparison will then be made of the PRC and Western prices
adjusted only for the relevant comparability factors, and not for the
15 percent price differential as well.
5. Low Earth Orbit (LEO) Provisions
In light of the emergence of the remote-sensing and weather-
tracking market for launches to LEO since 1989 and commercial plans for
the deployment of telecommunications satellite constellations into LEO
beginning in 1997, the Agreement contains specific disciplines and
guidelines regarding Chinese launches to LEO in Article II(B)(iii).
Pursuant to that Article, legitimate behavior in the international
market for commercial launch services is governed by the following
norms of behavior previously developed for the GEO market: (i) Market
principles including avoidance of below-cost pricing, government
inducements and unfair business practices; (ii) the use of government
supports in a manner consistent with practices prevailing in the
international market; (iii) the need to ``price on a par'' with the
prices offered by commercial launch service providers from market
economy countries including the United States; (iv) the need to act in
a manner consistent with prevailing practices in international markets
with respect to insurance or reflight guarantees; and (v) avoidance of
unfair discrimination against any international customer or supplier.
PRC participation will be consistent with significant U.S.
participation in the development of the LEO market and such
participation by the PRC will be proportionate and non-disruptive.
In evaluating Chinese compliance with the above provisions as they
pertain to LEO communications satellite constellations, the U.S. will
be guided first with respect to the initial deployment of such
constellations by the level of participation of providers from
countries with whom the U.S. has bilateral space launch agreements.
Accordingly, the Subcommittee will review proposals for the initial
deployment of a LEO communications satellite constellation in order to
determine if, in such proposals, the overall level of participation by
launch service providers in countries with whom the U.S. has concluded
a bilateral launch services agreement is more than 50 percent of the
participation of market economy launch service providers (as measured
according to the distribution of payloads).
In deciding whether a situation in which more than 50 percent of
the initial deployment has been granted to countries with whom the U.S.
has concluded bilateral space launch agreements raises concerns
regarding PRC compliance with its LEO commitments, the Subcommittee may
take into account certain other factors including: (i) The extent of
PRC and U.S. participation in the deployment; (ii) launch scheduling
requirements and the need to optimize launch vehicle selection to meet
deployment or operational requirements; (iii) the availability of
competitively-priced market economy launches to meet these
requirements; (iv) opportunities made available to the parties for
participation in the replacement market; (v) reasonable considerations
by the proposed system operator regarding commercial risk sharing
(``commercial risk sharing'' is defined to include equity participation
arrangements); and (vi) customers' requirements.
The U.S. Government understands that the scope and complexity of
these LEO satellite communications constellations makes these potential
ventures particularly sensitive to delays. Consistent with the
commitment to ensure a balance among all segments of the U.S. private
sector participating in space, the Subcommittee intends to conduct
reviews of LEO satellite communications constellations expeditiously so
as to avoid unnecessary uncertainty in the market place.
6. Discussions With Other International Parties
At least annually, the Subcommittee will consider whether
discussions with other international parties could be beneficial. If
the Subcommittee determines that discussions could be beneficial, it
will recommend to the TPSC and to the U.S. Trade Representative that
such discussions be initiated.
IV. Consultations With Domestic Interests
The Subcommittee and the Working Group will, in carrying out the
functions and procedures set forth in Section III above, consult with
and seek the advice of representatives of U.S. commercial launch
service providers, launch vehicle manufacturers and satellite
manufacturers and operators, 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 and
assessments referred to in Section III(1) above and U.S. preparation
for, and follow-up on, the results of consultations with the PRC held
under the Agreement. The Subcommittee will [[Page 20800]] also, as
appropriate, inform such interests of significant requests or
notifications made by the PRC under the Agreement, or significant
developments under the Agreement.
V. Information Sharing
In the course of consulting with domestic interests, in particular
prior to annual consultations under the Agreement, the Subcommittee may
provide such information provided by the PRC as is allowed by the
Agreement subject to business confidentiality.
VI. Treatment of Business Confidential Information
The Department of Transportation (DOT), as Chair of the Working
Group, will have primary responsibility for soliciting and receiving,
and will maintain information to be collected and reviewed by the
Working Group 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 PRC 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 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.
VII. Enforcement
If, as a result of information obtained in any consultation or the
comprehensive review required under Article VII of the Agreement or, on
the basis of information presented to it by the Working Group, the
Subcommittee is of the view that the PRC is not in compliance with the
terms of the Agreement, the Subcommittee will notify the TPSC and
recommend consultations with the PRC if appropriate. If consultations
proceed and satisfactory resolution is not achieved with the PRC or, if
consultations are deemed to be inappropriate in the circumstances based
on recommendations of the TPSC, the section 301 Committee may consider
whether the USTR should initiate an investigation pursuant to the
authority set forth in Section 301 of the Trade Act of 1974, as
amended.
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 its implementing
regulations, the International Traffic in Arms Regulations (see 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. 95-10334 Filed 4-26-95; 8:45 am]
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Sunshine Act Meetings
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 /
Sunshine Act Meetings
[[Page 20801]]
ASSASSINATION RECORD REVIEW BOARD
TIME AND DATE: 1:00 p.m., May 3, 1995.
PLACE: 600 E Street, NW, Room 206, Washington, D.C. 20530.
STATUS: Open.
MATTERS TO BE CONSIDERED:
1. Update by a representative of the National Archives and
Records Administration (NARA) on the President John F. Kennedy
Assassination Records Collection at NARA.
2. Discussion of and vote upon final interpretive regulations,
based on proposed interpretive regulations published for notice and
comment on February 8, 1995 (60 FR 7506-7508).
CONTACT PERSON FOR MORE INFORMATION: Thomas Samoluk, Press and Public
Affairs Officer, 600 E Street, NW, Second Floor, Washington, D.C.
20530. Telephone: (202) 724-0088; Fax: (202) 724-0457.
David G. Marwell,
Executive Director.
[FR Doc. 95-10495 Filed 4-25-95; 2:03 pm]
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