Future point of transatlantic stand-off: The EU Space Act

Despite the European Union’s - American tade deal being announced on Sunday, negotiations continue, with both sides issuing contradicting statements (as seen with potential introduction of network fees, where the White House says one thing and the Commission doesn’t confirm it).

So-called non-tariff barriers remain a very vague yet important subject. The White House’s fact sheet states that the “The European Union will work to address a range of U.S. concerns related to various EU requirements that are burdensome to U.S. exporters”, while the EU’s version is more limited: “Reducing non-tariff barriers, including via cooperation on car/automotive standards and SPS (sanitary and phytosanitary) measures, and by facilitating mutual recognition of conformity assessments in additional industrial sectors”.

The catch is that while negotiations can only address existing rules, the EU Commission’s busy agenda of new regulations and frameworks is creating fresh burdens for businesses, including American ones. 

One lesser-known example is the upcoming EU Space Act, published in late June and the Commission’s consultation for adoption is open until September, 2025 (you have to scroll a bit to find it in the Consultation page). If things go well, the Act would be adopted in 2026, and come into force by 2030. 

Non-tariff barriers for space industry in the EU Space Act 

The central (and public) arguments for the EU Space Act is to create harmonized rules for space sector around three pillars: 1) safety (“robust rules for tracking space objects and mitigating space debris, preserving Europe’s secure and uninterrupted access to space”); 2) resilience (“tailored cybersecurity requirements”); and 3) sustainability (“environmental impact of their space activities”).  

It sounds good on paper - the Earth’s orbit is indeed becoming crowded, cyberattacks on satellites are on the rise (the EU cites €1 billion in damages annually from such attacks), and no one wants space debris floating around, limiting access for new satellites and other technologies.

The problems lie in the fact that the EU’s Space Act may be a regulatory overreach in the EU’s own framework. The Article 189 (2) of the Treaty on the Functioning of the European Union (TFEU) explicitly says that the laws and regulations for space remain under the jurisdiction of Member States:

2.   To contribute to attaining the objectives referred to in paragraph 1, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish the necessary measures, which may take the form of a European space programme, excluding any harmonisation of the laws and regulations of the Member State

Environmental requirements, such as environmental footprint reporting, are important, but there is no global agreement on these issues yet. Europe's approach, while well-intentioned, is at best a drop in the ocean, and at worst, protectionist. It risks placing disproportionate burdens on non-EU companies, particularly from the U.S., which would need to tailor their products specifically for the European market. Meanwhile, EU-based SMEs may face a lighter regulatory load, supported by targeted financial incentives.

Douglas Gorman notes that “satellite operators’ manufacturing costs could increase as much as 10%”, potentially creating a significant short-term burden for the space industry. While the EU acknowledges that the industry will need time and support to adapt, promising a “targeted support package” - this commitment, read between the lines, could be interpreted as a form of protectionism aimed at shielding the EU’s own space sector.

While the Commission’s latest communication (page 5) states that it will “pursue mutual recognition and equivalence of rules and technical assessments with third countries”, in reality, the approach should be reversed. One cannot expect the top-down Brussels effect to materialize under such challenging geopolitical circumstances, where investing in and driving defense and space innovation is crucial.

What do Europeans think? 

Most people are not closely following this debate, and the Commission’s 2023 consultation received only 15 feedback submissions. While many of them begin with formal pleasantries and/or call for financial support to help European businesses adapt to the new regulations, a few submissions contain more striking and substantive statements.

The Bavarian Ministry of Economic Affairs, Regional Development and Energy (Germany) was notably direct in advocating for the use of existing mechanisms within ESA and the United Nations. A side note worth mentioning: since Brexit, the EU has grown noticeably more distant toward ESA - likely due in part to the UK remaining an active ESA member. 

“If the EU sets new standards, this should be done in cooperation with ESA [European Space Agency] and the UN. The United Nations has adopted Space Debris Mitigation Guidelines. ESA has a European Code of Conduct for Space Debris Mitigation. In principle, as far as possible, the same minimum standards should apply to all space actors. This is the only way to achieve greater sustainability and security in space.”

ASD-Eurospace (France) were direct, stating that the Commission should make this law a problem for all, not only the Europeans.

“Consequently, the EU Space Law shall apply to non-European stakeholders willing to address the EU market, in order not to create any competitiveness distortion with the European space industry”

The Belgian Science Policy Office (BELSPO) (Belgium) brought up the potential legal collision between Article 114 of TFEU (single market, harmonization) and Article 189 (research, technological development and space): 

“We understand that if Art. 114 TFUE is considered as the (main) legal basis for the EU Space Law, there should be a sufficient level of harmonization of the technical standards and norms serving as reference among the Member States, in order to avoid obstacles to the Single Market. However, in accordance with Art. 189, §2, TFEU, Member States should remain exclusively competent when it comes to organizing the administrative and procedural set-up applicable to their national activities, including permit deliverance, registration, liability recovery.”

And, reading between the lines, they suggested that the European Commission should not behave as though there is a regulatory vacuum in Europe - many countries already have national space laws in place and have made significant investments in space capabilities.

“At the same time, EC should recognize the achievements of EU and ESA Member States in terms of development of space capacities and of regulations applicable to space activities. European States have proven quite proactive in adopting dedicated legislation allowing them to implement national, regional and/or international standards applicable to space activities and aiming at preserving outer space as a shared resources. National laws primarily focus on implementing the provisions of the United Nations treaties, resolutions and other legal or technical instruments, which, considering the very nature and the characteristics of outer space, remain the ultimate reference to ensure a coherent and coordinated action towards global space security, safety and sustainability.”

More recent submissions regarding the adoption of the EU Space Act - though still limited in number - also highlight several key concerns. 

For example, a Bulgarian company notes that Member States are simply not prepared to implement the EU Space Act - or to individually verify compliance with its requirements:

“At the same time, from the point of view of the Bulgarian space industry, it is necessary to consider the fact that the proposed act provides for the main work on the implementation and verification of compliance with the requirements of the regulation to be carried out by a national authority. Meeting these requirements will require serious administrative and technical capacity in the national administration.”