AUKUS eases export restrictions under ITAR and EAR for certain defense related articles and technologies between the United States, Australia, and the United Kingdom. This strategic initiative has been taken to enhance the defense capabilities of all three nations to respond to national security threats posed by the Peoples Republic of China (PRC) and Russia.
AUKUS is now instituting its pillar 2 objectives to enable Australia to defend its borders and interests in the Indo-Pacific. This involves implementation of operational and regulatory frameworks to drive collaboration in governmental, academic, and industrial sectors to bolster and modernize Australian defense capabilities.
AUKUS History
AUKUS is a trilateral security partnership between Australia, the United Kingdom, and the United States that was initiated in 2021. Its initial priority was to facilitate the Royal Australian Navy’s acquisition of nuclear-powered submarines. The strategic partnership has also involved information sharing, counter-hypersonic technologies, cyber capabilities, artificial intelligence quantum technologies and additional undersea capabilities.
In May of 2024 the partnership published proposed changes to defense trade controls to create license exemptions for billions of dollars of cutting edge defense technologies between the neighbor states. This would effect both the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR).
AUKUS Revisions Affecting the EAR
The Bureau of Industry and Security (BIS) had published an interim final rule in April 2024 to remove license requirements for exports, reexports, and in-country transfers between the three countries. In May 2024 the BIS made corrections to that publication to footnote 9. This change, while easing licensing and end use requirements for most items would leave in place license requirements for firearms-related items and other CC controlled items.
These items include ECCNs 0A501 (except 0A501.y), 0A502, 0A503, 0A504, 0A505.a, .b, and .x, 0A981, 0A982, 0A983, 0D501, 0D505, 0E501, 0E502, 0E504, 0E505, and 0E982.
AUKUS Revisions Affecting the ITAR
The ITAR has often been viewed by many in the business community as a choke point for this shared defense innovation. This has often been caused by a perceived disconnect of policy makers towards the challenges businesses face in dealing with in exporting defense technologies. Many involved in the development, manufacture, and export of defense items find the greatest project delays have been because of ITAR licensing requirements.
The Directorate of Defense Trade Controls (DDTC) currently exempts permanent and temporary export of designated unclassified items to Canada. This was created in part because the Canadian government has instituted a compliance control regime that is largely harmonized to that of the Arms Export Control Act of the United States.
While current levels exemption exist at present for Australia, they do not cover all technologies envisioned by AUKUS. At present many transactions are occurring under Foreign Military Sales (FMS) which is a government to government transaction. To move past these barriers, interim changes have been made to provide frameworks for Direct Commercial Sales (DCS).
Further steps will be taken to identify programs specific to AUKUS, identify technologies not eligible, and identify which communities in each country would have access to technologies to prevent unwanted diversions. The final approach to will be reached between the Department of State and congress. Additionally, the Department will be seeking commitments from partners on shared standards for protecting exchanged materials and information.
Australian Initiatives for Breakthroughs
In 2023 Australian Deputy Prime Minister Richard Marles stated that Australia was innovation within their regulatory system while pursuing legislative change and international agreements. The country has made progress in aligning its export and trade regulations to streamline processes.
CVG Strategy Export Compliance Management Programs
As AUKUS eases export restrictions between the nations of the trilateral security partnership, export compliance remains a dynamic concern for businesses engaged in international sales. Failure to comply with regulations can result in criminal prosecution including imprisonment and fines. It can also result in civil penalties and disbarment from export activities.
CVG Strategy can help you in understanding the ITAR and EAR, and help you establish a coherent and effective export compliance program. We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team. Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help.