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Australian “AUKUS” export control exemption: will we get it, and what will it look like?

The United States Department of State is rapidly approaching the end of the 120 days of their NDAA FY24 mandated investigation into the future shape and content of the Australia AUKUS export control exemption. Australia can anticipate an update and potential draft of the exemption mechanism by mid to late April.

With this in mind, there are two critical unanswered questions that go to the heart of future Australia-United States AUKUS trade and technology collaboration.

Firstly, will the United States Congress "certify" the Australian export control regime as comparable to the United States ITAR and EAR?

Secondly, if Australia's system is "certified" and we therefore are eligible to get the exemption, what will the exemption look like?

ECAG can anticipate the answers to these questions. However, the exercise of thinking about them is a good one. In relation to the first question, as it currently is, Australia's export control regime is not comparable to the United States ITAR and EAR. However, to fix this, on November 30 last year the Department of Defence submitted the Defence Trade Controls Amendment Bill 2023. This Bill plugs some of the gaps between the Australian and United States export control regimes, bringing Australia closer to the standard of comparability that the United States Congress is looking for before it provides Australian with an exemption. Despite the Bill still being under review in the Australian legislative process, ECAG anticipates that the United States Department of State, and ultimately Congress, consider it as a done deal.

ECAG notes that even if this Bill is passed, the Australian export control system will not be a "like-for-like" with the ITAR and EAR, notwithstanding this, it is anticipated it will be good enough. This is largely because of the enhanced protections of critical technology from potentially malign actors within Australia, which is something the United States has wanted Australia to do for some time. On this basis, it appears likely that the Australian export control regime will be certified as comparable to the United States export controls system.

This brings us to the second question, "what will the exemption look like". There has not been much discussion in the Australian environment about what the exemption will actually allow for, how it will be constructed, and what Australian Defence projects, industry and academia will need to do to actually use it.

ECAG proposes that prior to the release of the exemption, it is worthwhile for Australia to recalibrate its expectations of the exemption. It is not going to be a complete exemption from the ITAR, EAR and FMS Program for Australia. Rather, it is likely to be a strictly defined eligibility-based mechanism within which certain technologies, certain nationalities and certain purposes do not need to obtain the normal United States export control licences. To complete the picture, there is also more than likely to be some unique record keeping and reporting requirements to enable the United States Department of State to meet its ongoing effectiveness monitoring obligations of the exemption.

Ultimately, ECAG anticipates Australia will get an AUKUS export control exemption. We expect the exemption to be a carve-out or mechanism that is eligibility based. ECAG also expects that while a large portion of Australian Defence and advanced technology trade and collaboration with the United States will benefit from the exemption, that not all will, because it's likely that some technologies, nationalities and purposes in Australia will be ineligible.

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