(1) NATIONAL POLICY ON THE COMMERCIAL USE OF SPACE (For Release at 2:00 P.M. EDT Friday, July 20, 1984) Private sector investment and involvement is essential if the enormous commercial potential of space is to be developed. The key to the success of industrial research and manufacturing in space and the development of space-based service is a clear policy defining government's role in encouraging private sector space-based activities that will benefit life on earth. The President today issued his National Policy on the Commercial Use of Space. The policy extends to four general categories: I. Economic Initiatives: Tax laws and regulations which discriminate against commercial space ventures will be changed or eliminated. Such changed will be subject to revision in accordance with decisions made on fundamental tax reform later this year. II. Legal and Regulatory Initiatives: Laws and regulations predating space operations will be updated to accommodate the commercial use of space. III. Research and Development Initiatives: In partnership with industry and academia, government will expand basic research and development which may have implications for investors aiming to develop commercial space products and services. IV. Initiatives to Implement the National Policy on the Commercial Use of Space: Since commercial developments in space often require many years to reach the production phase, entrepreneurs will receive assurances of consistent government actions and policies over long periods. Following are details of these initiatives. The Administration will take the following initiatives to facilitate the commercial use of space: Economic Initiatives: - Replace the current "carry-on test" for the 25% research tax credit with provisions allowing corporations engaged in a trade or business to form joint ventures and be eligible to use any R&D tax credits resulting from the venture. - Modify the tax code to assure that space capital projects owned principally by United States interests and operated for domestic purposes are eligible for the 10% Investment Tax Credit and the accelerated cost recovery system. - Facilitate long-term contracts with new space ventures if the Government has a need for the product and if the purchase would be cost-efficient. - Direct the Treasury to develop a proposal designed to identify those prototypes eligible for the R&D credit even though they eventually will be used in commercial service, so that current uneconomic incentives will be reduced. - Clarify the appropriate tariff regulations to ensure that space-made projects are not considered imports when returned to the United States. These proposed changes are in reference to the current tax law. They would, of course, be revised in accordance with decisions made on fundamental tax reform later this year. Legal and Regulatory Initiatives: - Assure that radio frequency assignment for private sector use is timely. - Provide additional protection of proprietary information through the Space Act. - Assure fair international competition. Research and Development Initiatives: - Expand current practices to increase private sector awareness of space opportunities and to encourage increased industry investment in high-tech, space-based research and development. Initiatives to Implement the National Policy on the Commercial Use of Space: - Increase public awareness about the commercial opportunities in space. - Develop a plan for privatization of specific government space activities. - Establish a high-level national focus for commercial space issues by creating a Cabinet Council on Commerce and Trade (CCCT) Working Group on the Commercial Use of Space. The Working Group will be chaired by a representative of the Commerce Department with a representative of NASA serving as vice chairman. Membership will consist of all interested departments and agencies. The SIG-Space Interagency Group will continue in its current policy rule.