Date="03/10/94"
Citation="59 FR 11360"
Group:"commerce"
Type="NOTICE"
Department="OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE"
Agency="OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE"
Subject="Guidelines for U.S. Implementation of the Agreement Between the U.S. and Russian Federation Government Regarding International Trade in Commercial Space Launch Services"

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.


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



The Contents entry for this article reads as follows: Russian Federation and U.S.; agreement regarding international trade in commercial space launch services; implementation guidelines, 11360