[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