U.S. Aerospace Commission Votes to Issue Interim Report in March

Report Will Include Recommendations in the Areas of Investment, Air
Infrastructure and Export Controls

WASHINGTON-During its second public meeting on February 12, the Commission
on the Future of the United States Aerospace Industry decided to issue its
second interim report in March 2002 to address issues of immediate
importance to the industry. The Commission voted to include
recommendations regarding aerospace investment, air capacity and export
controls in Interim Report #2 to be released in March. The Commission
conducted its meetings in the U.S. Department of Commerce Auditorium.

“After months of gathering information and hearing testimony from expert
witnesses, the Commission felt there were some action items that warranted
immediate attention,” said Chairman Robert S. Walker. “The second interim
report will focus on three areas vital to the health of the industry and
recommend steps that Congress should take in the near term to positively
impact the long-term outlook of the industry.”

The Commission received testimony from both industry and government
representatives in the areas of air transportation capacity and
infrastructure and export controls. Commissioner Heidi Wood presented the
investment recommendations she spearheaded along with Commissioner Bob
Stevens, Commissioners Ed Bolen and John Douglass proposed interim findings
and key recommendations regarding air capacity and infrastructure, and
Commissioners John Hamre and Bill Schneider led the discussion and
recommendations on export controls. At the meeting’s conclusion, the
Commission decided to release an interim report based on the following
proposed draft recommendations:

Aerospace Investment

1) Make Research and Experimentation (R&E) Tax Credit
permanent and on a par with other sectors.

2) Implement Shared Savings for Cost Efficiencies and
Rationalization.

* Incentivize contractors through cost savings retention, endorsing strategy under DOD consideration

3) Seek long-term resolution for Foreign Sales
Corporation/Extra-Territorial Income Exclusion Act of 2000.

Air Traffic Capacity and Infrastructure

1) Immediately create a multi-agency coordinating council with
the leadership responsibility and authority to
implement an integrated plan to reach the national objective
of moving air capacity substantially ahead of
anticipated demand.

2) Ensure robust FY03 and future NASA and FAA R&D funding to
continue current modernization efforts and provide the critical building
blocks for the future, such as small aircraft transportation systems, noise
and emissions reduction, Air Traffic Control (ATC) automation, and CNS
(Communication, Navigation and Surveillance).

Export Control Reform

1) Revive U.S. bilateral negotiations with Australia and the
UK to create a set of ITAR (International Traffic in Arms
Regulations) exemptions from the munitions licensing system.

2)
Update country risk surveys of major export destinations for munitions list
exports.

3) Accelerate the implementation of electronic licensing for
the munitions licensing system and ensure system interface compatibility.

4) Reduce regulatory barriers to the implementation of
global/program/project licensing under the Defense Trade Security
Initiatives (DTSI).

5) Modernize the Defense Export Loan Guarantee (DELG)
Program to facilitate the unsubsidized export credit
financing of U.S. defense exports to United States allies and friendly
nations.

The Commission on the Future of the United States Aerospace Industry is a
congressionally mandated commission, as established in Section 1092 of the
Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001,
Public Law 106-398. The Commission was formed to study the future of the
United States aerospace industry in the global economy, particularly in
relationship to United States national security; and to assess the future
importance of the domestic aerospace industry for the economic and national
security of the United States. The next public meeting of the Commission is
scheduled for May 14, 2002 in the Department of Commerce Auditorium.