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One Small Step for Human Spaceflight

The International Traffic in Arms Regulations (ITAR) have been a thorn in the American space industry's side for almost fourteen years, ever since Congress moved the maintenance of the munitions list from the Department of Commerce to the State Department in the wake of the Loral/China satellite scandal. One of the more absurd legal consequences of the new rules is that Virgin Galactic, Richard Branson's space tourism venture, had to consider non-U.S. nationals who flew to the edge of space from the American west as exports requiring a license from the State Department for each and every foreign passenger (presumably including Sir Richard himself, who is a British). But recently, in a rare fit of regulatory sanity, Virgin Galactic's U.S. flight operations were removed from ITAR control:
New Mexico-based Virgin Galactic, which now expects to fly its first paying customers in 2013, was told by the U.S. government that the company may fly non-U.S. citizens to the edge of space without first obtaining an export license from the State Department. Virgin Galactic asked “that their operations be removed from the scope of the International Traffic in Arms Regulations (ITAR),” Mark Sundahl, an associate professor of law at Cleveland State University in Ohio, told Space News in an April 10 phone interview. Early this year, the State Department announced “a favorable EAR99 ruling, which means that [Virgin Galactic’s] operations will not be ITAR-controlled.” Virgin’s flight hardware, Sundahl added, would remain under export control. However, he said the determination was, on the whole, “good news for Virgin Galactic and the entire space tourism industry.”
Presumably, the ruling will also apply to XCOR Aerospace, Armadillo Aerospace and Jeff Bezos's Blue Origin, other companies that plan to fly passengers and researchers into suborbit, as well as SpaceX, Boeing and Sierra Nevada Corporation, which hope to deliver passengers all the way to orbit within a few years. It's not complete relief, however:
The licensing exemption Virgin received in January from the U.S. government would not make international operations dramatically easier, according to Sundahl. He said that as long as Virgin’s hardware is made in the United States — and the company has not announced plans to manufacture elsewhere — the U.S. government will have regulatory authority over anything Virgin sends overseas to support tourist sorties to the edge of space.
This is the reason why XCOR's recent deal with Space Experience Curaçao is based on the concept of a "wet lease." That is, the Dutch investors won't operate the vehicle on the island, but instead pay (American) XCOR personnel to do so. Undoubtedly they'd prefer to simply purchase the rocket planes and operate them on their own, but due to the nature of ITAR, it is simply too cumbersome legally for XCOR to apply and get approval for the export license to allow this, which may put a continuing damper on the international market for their products.