In a recent piece at RealClearMarkets, Market Institute Senior Fellow Norm Singleton sounded the alarm over the European Union’s latest attempt to regulate one of the most promising frontiers of human innovation: outer space. The so-called “Space Act,” as Singleton explains, is packed with mandates that threaten to make the global space economy less competitive, less innovative, and more expensive.
“The growth of space business—like satellite services—presents challenges ranging from ensuring the safety of unmanned satellites to minimizing air and light pollution. These challenges present an opportunity for entrepreneurs to develop innovative ways to solve these problems in a way that enhances their products’ value to consumers. Unfortunately, they also provide an opportunity for bureaucrats and politicians to grab headlines by imposing new regulations on the space industry.”
Singleton points out that while some may believe European overregulation will give American companies an advantage, the reality is quite different:
“Some might think this law will give American companies a competitive advantage over European space companies. However, the space act applies to any company that wishes to provide services to EU residents. The EU is an important market for satellite communications, Earth observations, launch services, and hardware exports. American space companies also rely on EU companies for parts, and some U.S. companies have partnerships with them as well. The practical reality is that abandoning the EU market is not an option for most American space programs.”
The compliance costs imposed by the EU Space Act are staggering:
“The European Commission’s impact assessment of the space act’s licensing fees estimates that they could cost as much as 100,000 euros (approximately $115,809)—while a launch provider could have to pay as much as 1 million euros ($1,585,285.51). This ‘space tax’ could cost a U.S. company who is planning to launch a fleet (or constellation) of 20 satellites as much as 2 million euros ($2,316,200).”
And those numbers only begin to tell the story:
“The EU Commission estimates that the space act could increase the costs of manufacturing and operating a satellite company by as much as 10%. On top of that, costs could rise by an additional 10% due to the new cyber risk management and reporting duties imposed by the space act. Space companies must also contract with specialists in cyber security, risk management, and other areas.”
The impact won’t be limited to balance sheets. As Singleton notes, these compliance burdens also sap resources away from real innovation:
“Of course, this estimate of compliance costs cannot include the costs of lost innovations that could have been developed if companies were not forced to divert resources away from productive activities and towards complying with government mandates.”
Meanwhile, European companies are likely to receive government subsidies to offset their costs—putting U.S. firms at a further disadvantage and creating pressure for American subsidies and tariffs in response.
The irony is that the EU Space Act, by virtue of its scope and expense, could become a de facto global standard:
“The European Union’s proposed space law is an overly prescriptive and costly regulatory system that will make the space industry less competitive, less innovative, and more expensive. Ironically, the fact that compliance costs are so high could create a de facto global standard for (over) regulation of the space industry.”
Singleton concludes with a call for the U.S. to push back against this regulatory creep:
“The U.S. government should use its influence with Europe to change the space law, limiting the government’s role to punishing space companies for harm done to persons or property— and allow private companies to come up with their own solutions to the challenges facing the industry.”
⚖️ Instead of allowing Europe’s regulators to dictate the rules of the future, policymakers should defend a framework that fosters competition, innovation, and market-based solutions. Read more at RealClear Markets by clicking here.
