4-2-2-13 MEMORANDUM OF AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA REGARDING INTERNATIONAL TRADE IN COMMERCIAL LAUNCH SERVICES (Signed at Beijing on March 13, 1995, Entered into force January 1, 1995)

IV. Consultations

1.

The PRC and U.S. will consult annually with respect to the obligations in this agreement-in particular, the implementation of Article II (B) (ii), (iii), and (iv), including the nature and extent of direct and indirect government support provided to commercial launch services providers and developments—in particular, those described in Paragraph 3 below—in the international market for commercial launch services.

2.

In addition, each party undertakes to enter into special consultations within thirty (30) days of a request by the other party to discuss matters of particular concern.
In particular, special consultations will be held to review the situation in which there is an absence of Western launch availability due to full manifests or launch failures during the required launch period (generally within three (3) months before and after the preferred launch date), if the PRC has reached the limitation set out in Article II (B) (ii), or if the bunching provisions established in Article II (B) (vi) would apply to prevent the launch of a satellite. If information is provided which verifies, to the satisfaction of the U.S., that the situation described above exists, the U.S. may increase the quantity restriction of available launches established under Article II (B) (ii) or relax the bunching provision set out in Article II (B) (vi) to permit the satellite to be placed on the PRC launch vehicle manifest for launch.

3.

Semiannually, the limitation on the total number of satellites for international customers that may be launched by PRC providers of commercial launch services will be reviewed by both parties and, if appropriate, adjusted to reflect changes in the demand for launch services (including changes arising from a projected absence of Western launch availability over an extended period) upon request of the PRC in light of developments in the commercial launch services market.
Among the developments which would justify favorable reconsideration and cause the U.S. and the PRC to raise the quantity restriction established under Article II (B) (ii) and/or relax the bunching provision under Article II (B) (vi) are:

(a)

development of the market for commercial space launch services to GEO that is significantly greater than the estimated average over the life of the agreement of 12-15 commercial launches per year upon which the limitation set out in Article II (B) (ii) is based, taking into account PRC compliance with its commitments under the agreement; or

(b)

the development of a commercially viable project for satellite services that fundamentally changes demand for launch services.

If the parties agree that either of the above conditions exist, the U.S. may increase the quantity restriction established under Article II (B) (ii) and/or relax the bunching provision set forth in Article II (B) (vi) to satisfy the change in demand for launch vehicles for GEO satellites.

4.

With respect to Article II (B) (ii), if the average annual number of commercial launches subject to the provisions of Article II (B) (ii) (including launch failures) is 20 or more over the first three years of the agreement, or if the two governments, by mutual agreement, conclude that commitments (as defined in Annex I) for such launches indicate that average annual launches of 20 or more will occur during that three year period, then the quantitative limit contained in Article II (B) (ii) shall be increased to 13.
If the average annual number of commercial launches subject to the provisions of Article II (B) (ii) (including launch failures) is 20 or more over the first four years of the agreement or, if the two governments, by mutual agreement, conclude that commitments for such launches indicate that average annual launches of 20 or more will occur during the first four years of the agreement, then the quantitative limit contained in Article II (B) (ii) shall be increased to 16.

5.

If the U.S. independently determines that any of the conditions listed in paragraphs 2 or 3 of this Article have been met, the U.S. may unilaterally raise the quantity restriction set out in Article II (B) (ii) or relax the bunching provision described in Article II (B) (vi). Before such action, the U.S. shall notify the PRC of its intent to act unilaterally, and the PRC shall have thirty (30) days in which to respond to the proposed U.S. action. If the PRC does not object within thirty (30) days, the U.S. may take unilateral action to increase the quantity restriction or relax the bunching provision.

6.

The U.S. and the PRC agree to work toward a common understanding of the application of market principles to prices, terms, and conditions of commercial launch services for international customers.

7.

To facilitate the annual consultations, the U.S. and the PRC agree to exchange information as follows:

(a)

The U.S. shall each year in advance of such consultations provide to the PRC such publicly releasable information as it possesses with respect to prices, terms and conditions prevailing in the international market for commercial launch services.

(b)

The PRC shall each year in advance of such consultations provide comprehensive information to the U.S. regarding prices, terms, and conditions offered by PRC providers of commercial launch services for the launch of satellites. The PRC may also provide other information that it believes may have a material effect on pricing practices of PRC providers of commercial launch services.

(c)

The PRC may request that the U.S. provide additional publicly releasable information with respect to international prices, terms, and conditions, and may in addition request U.S. views regarding prevailing international market conditions and likely future developments, as well as government supports or inducements. The U.S. shall respond to such requests within thirty (30) days. If such information cannot be provided directly because of business confidentiality, the U.S. shall provide such information in summary form.

(d)

The U.S. may request additional information with respect to the prices, terms, and conditions offered by PRC providers of commercial launch services and any PRC government supports or inducements. The PRC shall respond to such request within thirty (30) days. If such information cannot be provided directly because of business confidentiality, the PRC shall provide such information in summary form.

(e)

The U.S. and the PRC shall keep all information received from each other under this paragraph strictly confidential and shall not provide it to any other government or any private person without the written consent of the other.

8.

The U.S. and the PRC shall also provide each year, in advance of the annual consultations, information on a connoneated basis concerning the commitments their launch service providers have undertaken to provide commercial launch services for international customers. This information may be made publicly available.

9.

If a launch of a satellite for an international customer will not be performed as scheduled, the PRC shall notify the U.S. regarding the reasons for the delay and the new date for the launch as soon as possible.

10.

It is understood that the U.S. and the PRC will review the information contained in this Article during annual consultations in the context of developments in the international market for commercial launch services.