A number of proposed amendments to Australia’s defence industry legislation are currently progressing through Australia’s parliament related to the AUKUS program. A critical issue faced by businesses operating in the defence sector is the difficulties in sharing technology and information given each of the AUKUS parties’ respective defence export control regimes. Australia has taken the first step to make it easier for the AUKUS partners to co-operate in this regard.
On 27 March 2024, the Defence Trade Controls Amendment Bill 2024 (the Bill) passed both houses of Australia’s Parliament. The Bill amends the Defence Trade Controls Act 2012 (Cth) (the Act) – which is Australia’s equivalent to ITAR in the US. The amendments implement changes to the Act to:
- regulate the supply of certain military and dual-use goods and technology on the Defence and Strategic Goods List 2021 (DSGL) from Australia to certain foreign persons both within and outside of Australia (the DSGL is made up of part 1 military goods and technology, and part 2 dual use goods and technology);
- regulate the provision of services in relation to DSGL part 1 military goods or technology to foreign persons or entities; and
- remove the requirement to obtain a permit for supplies of certain DSGL goods and technology and the provision of certain DSGL services to the UK or the US.
The Bill will take effect once it receives Royal assent.
Policy background
The Bill was drafted as part of the broader policy goal to reform the way that AUKUS partners cooperate on defence industrial and technology matters – with the reasoning behind the Bill being that removing licencing requirements from the AUKUS partners’ export control regimes will lower technology transfer barriers and generate more trade. This is particularly relevant to Pillar 2 of AUKUS, which contemplates the partner nations sharing “advanced capabilities”.
While the Bill removes licencing requirements as between AUKUS partners, it hardens Australia’s export control framework in respect of all other countries by imposing more rigorous conditions for the grant of a permit. The new export control regime established by the Bill will be comparable to that administered by the US.
Australia is the first of the three partners to formalise reform to its export controls regime. The US and UK are both currently considering reciprocal legislative amendments.
Practical effects on businesses in the Australian defence industry
The removal of the requirement to hold a permit for businesses supplying DSGL goods, technology and services between the AUKUS partner nations will lower the administrative burden on businesses supplying goods from Australia to the US and UK, and also on businesses employing staff and engaging contractors who are citizens of those countries.
However, unlike Australia’s existing export control regime, the new regime will apply inside Australia to foreign nationals of countries other than the US, UK, Japan and NATO member states who seek to work with sensitive defence material.
While other areas of Australia’s protective security environment have similar outcomes, like the security clearance regime, this is the first time in-country transfers to some foreign nationals will require a permit under Australian export control laws.
The Bill introduces three new criminal offences (being sections 10A to 10C of the Act as amended) for the sharing of certain sensitive technologies or services listed on the DSGL with non-US or UK countries and individuals, including those working in Australia.
Next steps for the export controls regime
Once the amendments come into force, Parliament will introduce proposed regulations which will need to be carefully reviewed for further insight into how the new export control regime will operate.
We are keeping a close eye on these developments and our Australian team has expert who can advise at all stages of defence sector engagement. Please reach out anytime to discuss these important developments.
For further information, please contact:
Jonathon Ellis, Partner, Bird & Bird
jonathon.ellis@twobirds.com
