US Navy Virginia-class submarine, USS North Carolina, docks at the HMAS Stirling port on the outskirts of Perth on August 4, 2023. (Photo by TONY MCDONOUGH/AFP via Getty Images)
UPDATED 8/15/24 at 4:12 pm ET with comment from the United States and United Kingdom.
SYDNEY and WASHINGTON — The United States, United Kingdom and Australia today announced a series of major defense export changes, with an eye on easing technology transfer and weapons sales among the three AUKUS nations.
Details of the agreement were first shared by Canberra with Australia-based reporters, including Breaking Defense, early on Thursday. Later that same day, the UK and US released their own information.
All three sides are in agreement that the change is a major one, with one Australian official calling it “the most ambitious and the most successful reform of defense trade between the three countries that we’ve seen in nearly two decades.”
The reforms, which go into effect Sept. 1, are being made to help Australia buy and build nuclear attack submarines as part of the AUKUS agreement between Australia, the UK and the US. While nuclear technology is not governed by ITAR, many of the components and systems on the two Virginia-class subs Australia is expected to buy are covered. The reforms should also aid in speeding some exports for the non-submarine, tech-focused AUKUS Pillar II initiative, officials here said.
Under current regulations, before Australia could receive US tech, the US State Department had to certify that Australia’s export regulations were strict enough to protect American secrets from making their way to a third party. Before this week, the State Department missed multiple deadlines to OK Canberra’s system.
The delay in getting the certification done has been a cause for agita among AUKUS supporters, but speaking to Breaking Defense last week, Australian defence minister Richard Marles indicated there were no major hurdles in the way.
“We’re confident that that’s all happening, as it has been intended to, is the short answer,” Marles said then. “So you know, we’re working closely with [the US government] and confident that’s all in hand.”
EXCLUSIVE: Australian defense minister Richard Marles on AUKUS, China and industry concerns
In a statement today, Marles said, “These critical reforms will revolutionize defense trade, innovation and cooperation, enabling collaboration at the speed and scale required to meet our challenging strategic circumstances.” Speaking to reporters here, a defense official was even more enthusiastic, saying “I think this is simultaneously the most ambitious and the most successful reform of defense trade between the three countries that we’ve seen in nearly two decades.”
John Healey, the United Kingdom’s defence secretary, called the regulatory reforms for all three countries “critically important.”
“This is a breakthrough that will allow our three nations to deepen our collaboration on defence technology and trade. Our new government will reinforce the UK’s role in AUKUS to boost Britain’s military capabilities and economic growth,” he said in a written statement.
The technical tool for the changes is a new rule to amend ITAR, which governs most US defense exports. A system or component must be on the US Munitions List to be subject to ITAR; if they are, an arms export license must be obtained from the State Department’s Political-Military Bureau. The legal presumption the bureaucracy operates under is that they should reject the license application by default and need a strong case made for why it should be approved — often a lengthy and complex process, one that companies large and small bridle at. Foreign countries are in the same position.
But under the new rule, “most military and dual-use goods” can be shared between the three countries, a second Australian defense official said.
“So essentially, it’s a license-free trade for over 70 percent of defense exports from the US to Australia that would normally be subject to [ITAR]. It also means that license-free trade for over 80 percent of defense trade from the US to Australia that is subject to Export Administration Regulations, or the EAR,” which is dual-use tech managed by the Department of Commerce as opposed to ITAR, which is controlled by State. Overall, this would reduce by “close to, or slightly over 900 export permits required under our export controls from Australia to the US and the UK, with a value of around $5 billion AUD a year,” the second Australian defense official said.
Defense exports from the UK to Australia, worth more than $129 million AUD per year, could be exported without having to go through the standard permitting procedure. That means “approximately 200 export permits” would no longer be required,” per Australian figures.
Nuclear, biological and chemical weapons, among others, will be on what will be known as the Excluded Technology List (ETL). They will require arms export licenses between the three countries, except where specific legislation exempts them. Australia and the UK are developing their own lists as well and they should be ready by the end of the month.
Perhaps the most important thing that the ETL construct does, the second Australian defense official said, is it “sets some specific time frames in which the US system has to provide a decision on a license that is on the ETL.” A government-to-government transfer must be decided within 30 days and a government-to-industry or industry-to-industry transfer must be decided by the State Department within 45 days.
“The other good thing.” the Australian official said, “is that the US ETL is subject to an annual review, and so obviously, as things change over time, in terms of technology and the need to either keep it on or take it off, that can be adjusted on a regular basis.”
A US State Department official told reporters that while the rule changes will facilitate the goals of AUKUS, they are ultimately much “broader than just the programs” within the trilateral security pact.
“Information sharing is much bigger than just export controls, and there’s efforts through DoD’s advanced capabilities forum that they have with industry to facilitate that greater information sharing outside of the export control space,” the official said. “I think this rule is really just addressing one element of facilitating that defense trade and defense innovation ecosystem that is the goal of AUKUS.”
In terms of time saved as a result of the new rules, the official said that it has historically taken the department about 40 days to process licensing applications — plus the time needed on the front end for companies to fill out those applications. With the change, both government and industry could expect those weeks to be cut out of the export control process.
Speaking to Breaking Defense ahead of this afternoon’s announcement, a UK official said the agreement was a long time coming, and that London has been pushing for such a move even before AUKUS came together.
The UK, in a statement, said the new agreement will cover as much as £500 million in UK defense exports each year, clearly a major win for local industry – but, the official emphasized, focusing on the economic impact misses the bigger potential change at play.
“So a lot of this was about, yes, removing the actual exemptions, but also I think really importantly, it represents a big signal of trust between the three partners,” the UK official said. “And we hope that it represents, and will lead to further, changing of culture in terms of how those three defense industries and we three governments work together as defense partners.”
Internal Australian Changes
In addition to clearing the way for faster approval of weapons sales between the three AUKUS countries, Australia is changing its internal export rules in order to address concerns from industry and academia about related exportability. The government plans to send to Parliament next week a request to add India, Republic of Korea, Latvia, Lithuania, Estonia, and Argentina to the already-25-country-long Foreign Country List.
For countries on that list, no export permit is required to supply technology on the Defense and Strategic Goods List (DSGL) to citizens of those countries living and working within Australia. For example, if a manager of a company in Australia wants to provide manufacturing specifications for a military vehicle to an employee in Australia who is a citizen of an FCL country, that can now be done without an export permit.
FCL countries can also reexport goods and technology on the DSGL Part 2 (Dual Use) “Sensitive List” or “Very Sensitive List” from Australia without an export permit. For example, an Australian company that has previously exported hydrophones from Australia to a country on the FCL list does not require a permit.
Aaron Mehta in Washington contributed to this report.
