In boost for Aukus, US says Australia and UK export controls comparable

(Photo credit: Reuters)

Source: The Straits Times

The US State Department told Congress on Aug 15 that Australia, the UK and the US now have comparable export control regimes, a significant step needed to facilitate technology sharing and allow the trilateral Aukus defence pact to move ahead.

Aukus, formed in 2021 to address shared worries about China’s growing power, is designed to allow Australia to acquire nuclear-powered attack submarines and other advanced weapons such as hypersonic missiles.

However, the sharing of closely guarded technology, which is governed by strict US International Trafficking in Arms Regulations (ITAR), has been a hurdle for cooperation.

The 2024 US National Defence Authorisation Act (NDAA) required President Joe Biden to determine whether Australia and Britain have export control regimes “comparable to” the United States’ and thereby qualify for ITAR exemptions.

“Today, the Department of State submitted to the Congress a determination that Australia and UK export control systems are comparable to those of the United States and have implemented a reciprocal export exemption for US entities,” the State Department said in a statement.

It said it would publish an interim final rule on Aug 16 to amend ITAR and implement export licensing exemptions for Australia and Britain, effective from Sept 1.

The final rule, however, will include a list of sensitive technologies excluded from ITAR exemptions, and analysts say this will likely mean that significant bureaucratic hurdles will still need to be overcome to realise the Aukus projects.

Earlier on Aug 15, Australian Defence Minister Richard Marles, nevertheless, called the reforms a “generational change” and a British government statement called them a “historic breakthrough”.

“These critical reforms will revolutionise defence trade, innovation and cooperation, enabling collaboration at the speed and scale required to meet our challenging strategic circumstances,” Mr Marles said in a statement.

A State Department official told reporters that for the US, approximately 80 per cent of the value of current commercial defence trade would be covered by the licensing exemptions, increasing the speed and predictability of those transactions.

The US issues around 3,800 defence export control licences for Australia each year that have taken up to 18 months to approve, while approvals for Britain have taken 100 days.

Australian and US officials said the US State Department will have a 45-day window to decide on the transfer of technologies on the excluded list between governments and industry, and 30 days for government-to-government transfers.

The State Department said a 90-day public comment period for the interim final rule would “allow for further refinement in subsequent rule-making”.

It said the aim was “maximise innovation and mutually strengthen our three defence industrial bases by facilitating billions of dollars in secure licence-free defence trade”.

A draft rule made public at the end of April was hailed as a game changer by Australia, although some experts on defence export controls said then the exclusion list was so broad as to make the policy changes almost meaningless. Among the exclusions were certain technologies for submarines and hypersonics.

The State Department official said the updated list of exclusions still contained “certain submersible technology, certain undersea acoustics technology” relevant to Aukus. However, this did not mean they could not be exported.

“All it means is that we need to see a licence for that before it goes,” the official said, adding that the applications would have to be processed within 30 to 45 days.

“We are going to make sure... that the trade can occur, that it can occur at the speed of relevance, securely,” the official said.

The unveiling of the draft in April was followed by a month-long comment period in which industry bodies and defence firms called for the list of exclusions to be narrowed.

Mr Michael McCaul, the Republican chair of the US House Foreign Affairs Committee, welcomed Aug 15’s move, but called it long overdue and said there were “still too many items that are critical to fully implementing Aukus that are not included in this exemption”.

“Until the Excluded Technologies List is limited to only a handful of items – as Congress intended – big government regulation will continue to hamper this crucial alliance’s ability to truly deter a conflict in the Indo-Pacific,” he said in a statement.

In a statement, Mr Eric Fanning, president of the Aerospace Industries Association, said Aug 15’s announcement signalled “important progress” to boost trilateral defence trade and technology cooperation, although it was “only the first step in setting the rules of the road for Aukus implementation”.

Former senior Pentagon official Jeff Bialos, now a partner at law firm Eversheds Sutherland, said the details of the final ITAR waiver would be critical as if they were too administratively unwieldy, they would fall into disuse and undermine the aim of enhanced technology cooperation.