Army photo

Gen. Robert Brown (left), commander of the US Army Pacific, stands at attention next two Australian two-stars, Maj. Gen. Roger Noble (center) and Maj. Gen. Daniel McDaniel (right).

The strategic challenges facing Australia and the United States in the Indo-Pacific today present a renewed case for the US and its trusted allies to seek innovative ways to aggregate their collective defense industrial capabilities.

The United States has a long history of drawing upon the defense industrial bases of its allies when in need. In Australia’s case, munitions and explosive facilities in Victoria and South Australia – still in operation and recently modernized – were first built to support America’s military campaign across the Pacific during the World War II.

Brendan Thomas-Noone

The US National Technology and Industrial Base (NTIB) – expanded in 2017 to include Australia and the United Kingdom, alongside Canada – was intended to lay the groundwork for further defense industrial integration. The expansion was based on the strategic assumption that only some in the US system fully appreciate. For the United States and its allies to maintain their military-technological edge, Washington must aggregate the research and development and industrial bases of its allies, and incentivize the co-development of new capabilities.

But progress has stalled. The NTIB framework is helping on issues like the alignment of foreign investment review practices, but there’s been little movement in the last two years toward more ambitious reform. 

For example, the restrictive and burdensome nature of US defense export controls mean many Australian defense companies cannot obtain unclassified US tender documents thanks to the International Traffic in Arms Regulations (ITAR). Making unclassified tender documents available to all NTIB members would be a simple step to immediately help integration.

A more ambitious effort for the NTIB would be to facilitate technology and data transfer for trusted partners. Allies like Australia with the ability to sustain independent operations in their near regions — through the maintenance of joint-capabilities like the P-8, F-35 or the production of highly consumable resources like munitions — are ultimately more capable strategic partners for the United States, with greater capability to respond to regional crisis, fill gaps in US defense supply chains and act as regional maintenance hubs.

As such, Washington’s slow rolling, or unwillingness to use, the NTIB as a vehicle for strengthening its allies weakens the value partners like Australia can bring to the United States. It also encourages allies to seek alternative pathways in military capabilities, harming interoperability and the need for joint defense planning in the region.

An example of this occurred in 2017 when Australia was conducting strike operations alongside the US against ISIS in Iraq and Syria. Due to several factors, including structural limitations in the US own defense industrial base, the Australian Defence Force (ADF) was left without an assured supply of precision-guided ground attack munitions and turned to local defense industry to quickly address the shortfall. Critically, because of technical data restrictions due to US export controls, local government and industry experts were forced to stand-up manufacturing lines without American assistance.

In this instance, Australian industry responded relatively quickly to the urgent request, leading to the successful manufacture of the first-ever plastic bonded explosive fill using all Australian components. However, time pressures in a future conflict and the complexity of the kind of munitions required in high-end operations would more than likely outstrip current Australia’s capabilities.

A properly functioning NTIB could address this problem by facilitating technology and data transfer for trusted allies – making it possible for Australia to keep contributing to priority coalition operations and backfilling US munitions shortfalls in service of Australian and American interests.

While the expanded version of the NTIB is still relatively new, there are growing opportunity costs for Australia and the United States as the process of implementation languishes. As close allies like Australia continue to be treated the same as other countries by the US defense export control system and its extreme extraterritorial application, they will undoubtedly begin to treat collaborating with the United States (and US persons) as a risk and a barrier, rather than an enabler.

Due to these risks, it will increasingly make little business sense for innovative – and in some cases more advanced – companies in Australia, the United Kingdom and Canada to sell or collaborate on their best technology with the US. The risk of sharing or collaborating on a defense article or idea only for it to be brought under US defense export controls, forcing the company to apply for State Department licensing throughout its entire life cycle, is a significant barrier for small innovative companies.

Additionally, the United States may increasingly be walling itself off from needed technology. In niche areas, NTIB members are carrying out technological work that is as good and, in some cases, better than what is taking place in the United States. The research and experimentation on hypersonic technology occurring at the University of Queensland, where a consortium of the US Air Force Research Laboratory, the Australian Defence Department’s Defence, Science and Technology (DST) research arm, BAE Systems Australia and Boeing are working on the HiFIRE program is one example. Australia’s long investment in phased-array radar technology – some of the best in the world – is another. 

As William Greenwalt found, companies in allied countries are increasingly creating two product lines to avoid US defense export controls: one for the US market, and a superior version for others.

On the macro-level, the United States must harness and aggregate the R&D bases of its allies, break through barriers to incentivize them to invest in co-development and in some cases co-manufacturing of new systems, and build their sovereign capabilities to make them more effective strategic partners. There is little doubt that there will be hard limits to NTIB integration in core areas of traditional defense industry labour, like naval shipbuilding, which are highly regulated and protected in many countries. But the strategic challenges facing Australia and the United States require a major change in their willingness to execute politically difficult reform over how NTIB countries can work together. 

Brendan Thomas-Noone is a research fellow at the United States Studies Centre at the University of Sydney. He is the author of Ebbing opportunity: Australia and the US national technology and industrial base.