Before changes to U.S. arms export regulations in the late 1990s, Chinese Long March rockets lofted commercial satellites built by non-Chinese companies at a rate of two or three per year.

By 2000, the number had dropped to zero following the 1995 launch-pad explosion of a Long March 2E and its payload—a Hughes-built HS-601 communications satellite—a mishap that U.S. lawmakers said exposed Chinese engineers to American space technology. By 1998, Congress shifted commercial satcoms and related components to the U.S. Munitions List, subjecting them to U.S. International Traffic in Arms Regulations (ITAR) and effectively barring their launch on Chinese rockets.

Then, on April 12, 2005, a Long March 3B rocket lofted what was considered the first “ITAR-free” communications satellite built by a Western manufacturer to launch on a Chinese vehicle since the U.S. crackdown: Apstar 6, developed for APT Satellite Holdings of Hong Kong by Franco-Italian manufacturer Alcatel Alenia Space (now Thales Alenia Space).

Three years later, as U.S. satellite manufacturers bemoaned the impact of U.S. export controls on their global market share, Thales provocatively coined the term “ITAR-free” for the purpose of marketing a variant of its Spacebus 4000 platform that was billed as devoid of restricted U.S. technology and suitable for launch on low-cost Long March vehicles.

The move caught more than just the attention of beleaguered American satellite makers, however. In May 2008, the State Department initiated an investigation into the origin and nature of U.S. hardware incorporated into the Thales Spacebus 4000 platform, under its Blue-Lantern end-use monitoring program.

Historically, development of the ITAR-controlled Spacebus 4000 included the export of significant U.S. defense articles and services, according to State Department officials. Since 2005, nine ITAR-free commercial communications spacecraft based on the Spacebus 4000 have been launched, including seven atop Long March vehicles. Following a lengthy review, the State Department says there has never been an “ITAR-free” or unrestricted Spacebus 4000 satellite, and that over many years, a number of U.S. suppliers have misclassified ITAR-controlled components as if they were commercial or dual-use.

In the case of Spacebus 4000, the State Department says U.S. hardware “was incorrectly exported as if it were under the jurisdiction of the Department of Commerce's Export Administration Regulations (EAR),” which are less restrictive than the Arms Export Control Act that governs ITAR.

In August, Thales Alenia Space said it had agreed to no longer advertise certain variants of its Spacebus 4000 satellite platform as ITAR-free, marking the end of several years of back-and-forth after Thales Alenia Space insisted its ITAR-free specs were proprietary.

Eventually, U.S. officials met with Thales engineers and learned that some of the components in question contained ITAR-controlled parts. The State Department maintains that if a screw, spring or other widget in an assembled component is ITAR-controlled—that is, designed or adapted for controlled use—the entire component is restricted under U.S. arms export regulations. But Thales says it relied on its U.S. suppliers, who claimed their products contained no such hardware.

One of those suppliers, Aeroflex Inc. of Plainview, N.Y., misclassified thousands of ITAR-controlled hardware and components as being dual-use in nature, and therefore subject to the less rigorous export licensing process applied by the U.S. Commerce Department. As a result, the company, a global supplier of high-tech microelectronics, failed to obtain proper export licenses for products shipped to France and the United Arab Emirates that were incorporated into satellites and later launched on Chinese and Indian rockets, respectively.

In a July 25 letter to Aeroflex CEO Leonard Borow, the State Department charged the company with 158 export violations, acknowledging that many of the infractions were brought to light through voluntary disclosure by Aeroflex, which sought the department's determination on commodity jurisdiction for some of the parts in question. Among the most damaging violations, according to State, was the export of 50 ITAR-controlled radiation-tolerant, low-voltage differential signaling (LVDS) receivers shipped to France in 2008 without department authorization.

“The LVDS receivers were incorporated into an 'ITAR free' or unrestricted Spacebus 4000 satellite and subsequently re-exported to the People's Republic of China,” the letter states.

Separately, in a disclosure to the State Department on Oct. 15, 2009, Aeroflex said that from 2001-03, it exported 10 application-specific integrated circuit prototypes to Belgium and another 100 to France for end use on a similar Spacebus 4000.

“These items were subsequently launched from the People's Republic of China,” the letter asserts. “The unauthorized re-exports caused harm to national security by providing the People's Republic of China a more reliable satellite capability.”

In July, Aeroflex agreed to a $4 million fine and $4 million in remedial compliance measures and associated costs, according to a State Department consent agreement signed by Borow and Tom Kelly, acting assistant secretary for the department's Bureau of Political-Military Affairs.

Over the past few years, the Obama administration has gradually advanced an effort to loosen export controls on some commercial satellite technology. But it is too soon to say what the new rules will and will not do regarding exports of Spacebus 4000 components.

In the meantime, Thales is not taking any chances. Earlier this year, the company switched to a Falcon 9 launch vehicle built by Hawthorne, Calif.-based Space Exploration Technologies (SpaceX) to loft a new telecommunications satellite the company is building for the government of Turkmenistan. Initially, the company had planned to launch the spacecraft atop a low-cost Chinese launcher, according to a December 2011 news release issued by China Great Wall Industry Corp., in which the state-run company announced it had signed a launch-services contract with Thales Alenia Space for launch of Turkmenistan's first telecommunications satellite.

“We have always fulfilled the U.S. and ITAR regulations in the past,” Thales Alenia Space President and CEO Jean-Loic Galle said Sept. 9. “As far as the future is concerned, we recognize that due to the change of classification of some components by U.S. suppliers and/or by the U.S. administration today, yes, we have to acknowledge there are some ITAR components in our Spacebus satellite. As a consequence, we accepted the fact that we will no longer export those satellites to China, either to a Chinese customer or to launch for an export customer.”